HEALTH LAW

&POLICY

Volume 3, Issue 1 Spring 2009

HEALTH LAW

&POLICY

Managing Conflicts of Interest in Health Care Innovation 2

Georgiana Avramidis

Testimony: The State Role in the Regulation 11 of Prescription Data-Mining

Meredith Jacob

Technology Mediated Dispute Resolution 15

and the Deaf Community

David Allen Larson and Paula Gajewski Mickelson

Physician Profiling: Policy Options to Improve Efficiency in Medicare 28

Jackson Williams

California Health Insurance Law Opens the Floodgates 37

for a Potentially Unsustainable Amount of Plastic Surgeries:

What Went Wrong and How to Fix It

Adam S. Frankel

FDA Regulation of the Importation of Prescription Drugs: 48

Opportunities and Barriers to Legal Importation

Eloy A. Peral

COLUMNS 56

Health Law & PolicySpring 2009 Staff

EDITORS-IN-CHIEF

Chandana Kolavala

William N. Papain

Rebecca L. Wolf

SENIOR ARTICLES EDITOR

Thomas B. Sparkman

SENIOR MANAGING EDITORS

María Mañón Jocelyn Moore

JUNIOR ARTICLES EDITOR

Alexander Burke

JUNIOR MANAGING EDITOR

Adam S. Frankel

SENIOR STAFF

Jason R. German Alexandra Moylan

John Johnson, III Jillanne M. Schulte

JUNIOR STAFF

Maayan Deker Megan McCarthy

Elicia Ford Megan McKinney

Mariana E. Gomez Jessica Millward

Anne-Elizabeth Johnson Jennifer Ward Thomas

Taiwoods Lin Sherra Wong

1L STAFF

Kristen C. Barry Molly Elizabeth Conway

Walakewon Blegay Kimberly Hodgman

Kathryn Coniglio

ADVISOR

Corrine Parver, Esq.

Practitioner-In-Residence and

Executive Director, Health Law Project

LL.M. Program on Law & Government

COVER DESIGN

Cesar Lujan

Health Law & Policy is printed in accordance with the

standards established by the Forest Stewardship Council

(FSC) that are designed to eliminate habitat destruction,

water pollution, displacement of indigenous peoples and

violence against people and wildlife that often accompanies

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Currently, FSC Certification is one of four methods a

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& Policy is printed using vegetable based inks, formulated

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compounds (VOCs).

Health Law & Policy (HLP) is a publication of American University Washington College of Law (WCL) and the Health Law Project LL.M. Program on Law &

Government. No portion of this publication may be reprinted without express permission of HLP. Views expressed herein do not reflect those of HLP or WCL.

1Spring 2009

LETTER FROM THE EDITORS

Dear Health Law & Policy Reader:

On behalf of the editorial board and staff, we proudly present this issue of Health Law

& Policy (HLP). Now in our third year, we continue to strive to produce a publication

that will both inform our readers of new and pertinent developments in the ever-

changing field of health care, provide an opportunity for health law practitioners to

contribute to scholarly discourse, and raise awareness for health issues in the greater

legal community.

Our fifth issue opens with an article on ways to manage conflicts in health care innovation

by one of the founding members of HLP. Following this article is model testimony by

a Washington College of Law (WCL) pharmaceutical policy fellow that discusses data

mining in the health care context. This issue also includes three articles that address

the intersection of health and law and how to bring advancements to both. One of

these articles analyzes the way in which we can use innovations from Deaf Culture to

improve alternative dispute resolution. The student-written articles that follow explore

flaws in health insurance law, and discuss the regulation of prescription drugs. Finally,

our column section focuses heavily on the current economic climate and its impact on

the field of health law.

This semester we co-hosted our second symposium at WCL on women’s health care

research, genetics, and sexuality. Transcripts of these presentations are forthcoming in

the Fall 2009 issue of HLP. We are pleased to cover such a broad range of topics, and

invite new authors to submit works for publication.

We extend our sincere gratitude and thanks to our advisor, Professor Corrine Parver,

Esq., for her dedication and guidance. Further, we would like to thank our staff members

for their efforts during the production of this issue. As we prepare to graduate, we are

confident that HLP will continue its success under the leadership of the new executive

board and staff. We hope that you enjoy this issue as much as we enjoyed putting it

together.

Sincerely,

Chandana Kolavala Rebecca L. Wolf William N. Papain

Editor-in-Chief Editor-in-Chief Editor-in-Chief

2Health Law & Policy

I. Introduction: Information

Exchange Through

Industry-Provider InteractionsClose and ongoing collaboration between health care

professionals and the pharmaceutical drug, device,

and biotechnology industries is a fundamental and

necessary aspect of medical innovation. Companies

interact with health care providers in a variety of ways:

through product training sessions or conferences, sales

and promotional meetings, consulting or investment

arrangements, research and trial arrangements,

economic remuneration, grants, or charitable dona-

tions.1 Industry-provider interactions aim to promote

public health through sharing and exchanging

information between health care professionals, who

have clinical experience and expertise and the health

care industry, which has the resources to expend on

innovative and critical treatments and technologies.

These collaborations between industry and health care

professionals save and improve the lives of millions

of patients through medical breakthroughs and daily

patient treatment.

The vital role of informa-

tion exchange in advanc-

ing medical technology

cannot be downplayed.2

The clinical experience

and expertise of health

care professionals pro-

vides invaluable insight

into industry research

and development and

initiates progress and

innovation. In a recent

example of the essential

open flow of communication between clinicians and

manufacturers, physicians relayed information to med-

ical device companies about implanting metal plates

into children’s skulls.3 The feedback from physicians

prompted manufacturers to fashion smaller sized plates

customized for children, thereby improving the quality

of health care for a specific population.

Opponents of ongoing collaborations between indus-

try and health care professionals express the belief

that each health care player holds a conflicting and ini-

tially irreconcilable stake against the other’s interests.

Therefore, the mere appearance of such conflict draws

suspicion of untoward behaviors and raises legitimate

questions concerning the potential for prescriber bias.

A close relationship between industry and health care

professionals, however, does not necessarily indicate

inappropriate relations or a relationship that will have

a less beneficial effect on progress in health care. In

fact, studies show that “fears that disclosed conflicts of

interest are leading to tainted, unreliable recommenda-

tions are unfounded.” 4 This does not necessarily mean

that improper behavior does not arise out of interac-

tions in which there are conflicts of interest.5 The

cases of Moore v. Regents of California6 and Gelsinger

v. Trustees of Univ. of Pennsylvania7 drew a signifi-

cant amount of public attention for the harm associ-

ated with research experiments in which physicians

held a financial interest. In Moore, treating physicians

influenced a patient’s decision to undergo unnecessary

tests, leading to an outcome that advanced their own

gains rather than those of the patient.8 The California

Supreme Court held that by failing to disclose their

personal interests in the treatment the physicians did

not satisfy the duty to give informed consent, thereby

denying the patient the opportunity to properly balance

the risks and the benefits of continued treatment.9

Also in the realm of clinical research, the Gelsinger

case associated the death of a teenage participant in

a University of Pennsylvania research study with the

principal investigator’s conflicting financial interest

in the outcome of the study, which prompted attempts

to regulate or otherwise monitor physicians with

an interest in research.10 Gelsinger also presents a

case where the industry-provider relationship was

automatically viewed as unseemly because something

went wrong.11

The information exchange works both ways. Health

care professionals often rely on industry input

and training to properly and effectively dispense

pharmaceutical drugs and devices. While promoting

the free exchange of information between health care

players, this approach tends to be controversial when

it involves seemingly extravagant gifts or payments

for meals, travel, and consulting. Physicians con-

Georgiana Avramidis is a 2008 graduate of American

University Washington College of Law, and was one

of the founding editors of Health Law & Policy. Ms.

Avramidis joined Vertex Pharmaceuticals Incorporated

in 2008.

MANAGING CONFLICTS OF INTEREST IN HEALTH

CARE INNOVATION

Georgiana Avramidis*

3Spring 2009

tend, however, that “the best approach to optimize

cost effectiveness of product prescribing is to promote

more, not less, interaction among all stakeholders

involved in healthcare delivery.”12 Indeed, provided

that the industry presents information to a physician

without stipulation, the physician may decide freely

which course of treatment to recommend.

The main purpose of industry-provider interactions

is to promote an exchange of ideas and data

regarding a product, an innovative idea, or a medical

advancement.13 In a conflict of interest analysis, where

the conflict of interest is reviewed for its anticipated

impact, the promotion of medical technology and

innovation is generally the primary interest. For the

information exchange to be worth the valuable time

of health care professionals, however, ties with the

industry often involve monetary or non-monetary

incentives. For instance, secondary interests in the

interaction may be the fee provided in exchange for

a physician’s consulting work. A secondary interest

might also be a provider’s interest in a company or

the gain in reputation from association with a ground-

breaking treatment or technology. Both primary and

secondary interests are desirable. Although one may

have “a claim to priority” that undermines the integrity

of the first interest, in order to make the interaction

beneficial for all parties involved the challenge is to

ensure that both interests are realized.14 Collaboration

between these entities often gives rise to inherent

conflicts of interest because incentives in industry-

provider interactions are simultaneous and potentially

incompatible.

II. Current Efforts in Managing

Conflicts of InterestIn March and April of 2008, Congress responded to

the growing mindfulness, if not wariness, of industry

interaction with health care providers and its effects on

the provision of health care by introducing legislation

to regulate industry-provider interactions.15 Known as

the Physician Payments Sunshine Act, the legislation

aims to “shed light” on collaborations in health care by

mandating quarterly disclosure of interactions resulting

in monetary amounts over a certain threshold.16

By disclosing the existence of industry-provider

interactions, the legislation empowers health care

consumers with information about the development,

the procurement, and the distribution of drugs and

devices.

Disclosure legislation, such as the Physician Pay-

ments Sunshine Act and other state regulation,

supple ment efforts by industry trade associations to

create institutional codes of ethics. Media coverage

characterizes these efforts as aimed towards “reining

in doctors,” but the codes recognize the shared

responsibility of the health care industry and providers

in preserving public trust.17 These approaches are

voluntary and set the standard within each industry

for the management of interactions with health care

providers while promoting the best interests of the

health care consumer. For instance, the Pharmaceutical

Research and Manufacturers of America’s (PhRMA)

Code on Interactions with Health care Professionals

provides guidance for interactions ranging from

consulting arrangements to educational funding from

pharmaceutical companies.18 The Advanced Medical

Technology Association’s (AdvaMed) Code of Ethics

on Interactions with Health Care Professionals provides

guidance on the promotion of ethical industry-provider

interactions in the device space.19

Legislative efforts, however, use disclosure as a means

of regulating industry-provider interactions. While

this is a reasonable and effective method of preventing

abuse and negating the questionable impression that

industry-provider ties often raise, it is important to

recognize that conflicts of interest necessarily arise in

all types of interactions where two or more intersecting

interests exist. Moreover, in some cases, the outcome

of an interaction that gives rise to an irresolvable

conflict of interest is so desirable that it should

nevertheless proceed. Where circumstances show that

an interaction provides information so compelling

and necessary, there is a rebuttable presumption that

the interaction should continue despite a conflict of

interest. This approach holds that industry influence

negatively affects a physician’s decision-making

process and makes the assumption that by virtue of this

potentiality, the dual interests cannot co-exist unless

they pass the high “compelling circumstances” bar.20

This approach is problematic because interactions that

are useful in providing meaningful outcomes, but not

necessarily “compelling” ones, are unable to proceed.

Indeed, conflicts of interest are so ubiquitous that the

benefits that arise from industry-provider interactions

stall under the high bar set by the rebuttable presumption

approach.

The interests of science and research are better served

when existing conflicts are managed, instead of disal-

lowed, because it is often the case that two intersect-

ing interests can co-exist in a manner that allows both

to be fulfilled. Under the management perspective, an

advisory board may require an individual to recuse

him or herself from involvement in a particular proj-

ect, place any equity interest in a trust for the dura-

tion of the project, or encourage disclosure of conflicts

Where

circumstances show

that an interaction

provides information

so compelling and

necessary, there

is a rebuttable

presumption that the

interaction should

continue despite a

conflict of interest.

4Health Law & Policy

of interest to manage the conflict. The last require-

ment, disclosure, simultaneously satisfies the health

care professionals’ desire to continue with a project, the

regulating body’s interest in limiting untoward behav-

ior, and the health care consumer’s need for informa-

tion with which he or she can make knowledgeable

decisions about treatment

options. Disclosure that

includes details providing

context for each interest

is necessary to determine

whether the conflict of

interest is manageable

in a way that renders its

outcome desirable despite

any initial reservations.21

This vital data aids health

care consumers in under-

standing conflicts of inter-

est in a way that does not

preemptively find them

unmanageable.

As the largest health care insurer in the nation and a

major purchaser of pharmaceutical drugs, de vices, and

bio technology, the U.S. government has a financial

interest in overseeing any conflict of interest that arises

between the health care industry and health care pro-

fessionals to ensure that health care choices are made

in the patients’ best interest.22 The government’s atten-

tion to conflicts of interest in medicine is therefore

aimed at controlling industry influence on prescribers’

decision-making.

Interactions that promote innovation and information

sharing, however, are in the best interest of the pub-

lic. Any efforts to manage conflicts of interest through

disclosure better serve health care consumers when

tempered to encourage technological advancement.

A thoughtful analysis of the value of managing con-

flicts of interest through disclosure includes an inquiry

into the trade-offs of providing “light” on industry

interactions. This article will suggest that disclosed

information which is not properly managed through

government or institutional regulation may hinder

technological progress and information exchange

between industry and health care providers. To ensure

that the benefits of disclosure regulation outweigh its

burdens, it is important to assess the information dis-

closed for its meaningfulness and for any unintended

effects on the health care system. Finally, this article

will suggest that disclosure of a conflict of interest is

successful because it advances the fundamental value

in health care of autonomy.

III. Value and Effects of

Disclosures

Industry only gains when its products and technologies

are implemented correctly and prescribed free of

unseemly behavior. Technical procedures require

that industry interact within health care professionals

in operating rooms, private practices, and learning

and training seminars without raising the specter of

untoward influence.23 Similarly, the financial support

that health care professionals, and the health care system

as a whole, acquire through industry is necessary to the

promotion of research and development. This circu-

lar relationship establishes a conflict of interest.

A typical conflict of interest analysis calls for an inquiry

into whether secondary interests can exist without

jeopardizing the initial objectives of the industry-

provider interaction. If the primary interest in an

interaction between a pharmaceutical drug, device, or

biotechnology company and a health care professional

is collaboration towards an innovative medical

product that promotes a better and more efficient

health care system, then any secondary interests that

directly interfere with that goal create a conflict of

interest. A secondary interest may interfere either by

compromising the original goal with tangible negative

results (such as the Gelsinger case), or by affecting

the mere appearance of impropriety. Generally, part

of managing a conflict of interest includes acknowl-

edging its existence through disclosures made to the

public.24 Industry benefits from full disclosure of

its interactions with health care providers. Through

disclosure, industry has an opportunity to cast its pursuits

as driven not only by profit, but by the pioneering of

new and important technologies in medicine for the

betterment of health care. Moreover, industry has the

opportunity to explain the important and justifiable

reasons for its presence in a health care professional’s

practice. Disclosures detailing the circumstances of

the industry-provider interactions help inform

interested parties about the goals pursued by industry

and the necessity for input from clinicians.

One of the benefits of disclosure legislation, which

figuratively “shines light” on industry interactions,

is the opportunity for industry to embrace disclosure

as a means by which to shed the public perception of

industry as a “dark force” and instead emerge as a vital

means toward medical innovation and development.

Industry’s “bottom line” can, and does, co-exist with

the promotion of public health.25 Similarly, those goals

can co-exist with the health care provider’s interest in

fees, investment, or other monetary or non-monetary

gains.

Through disclosure,

industry has an

opportunity to cast its

pursuits as driven not

only by profit,

but by the

pioneering of new

and important

technologies in

medicine for

the betterment of

health care.

5Spring 2009

Information exchanged through industry-provider interactions is so vital

and so meaningful to advances in health care that discouraging collaboration

based on the existence of a conflict of interest would ultimately cause more

harm than good to the greater health care system.26 Recently proposed

guidance from the Food and Drug Administration (FDA) provided

clarity on its prohibition of “unlawful promotion” of a product in the

dissemination of off-label information in the form of medical or scientific

reference publications and medical journal articles.27 In its draft guidance,

the FDA recognized the “public health value to health care professionals of

receiving truthful and non-misleading scientific and medical information”

and that such uses may in cases “constitute a medically recognized standard

of care.”28 The Journal of the American Medical Association (JAMA) also

recognizes the importance of impartiality and requires a neutral party to

review industry-funded studies prior to publication. These efforts reflect

recognition of the benefits arising from a health care professional in

possession of clinical data that can improve a pharmaceutical drug or device,

as well as assist a drug or device company by informing the company on

how to best implement or use a product. In other words, the value placed

on the exchange of information is often worth the risks that may arise from

a conflict of interest. Disclosure of industry ties does not automatically

negate the relationship. In more extreme instances, however, the specter

of the disclosure itself is so detrimental that it threatens to negate those ties

and the information attached to them.

IV. Unrestrained Disclosure May Harm,

Rather than Promote, the Primary Interest

of Improving Health Care by Obstructing

the Information SharedAlthough public disclosure of a conflict of interest in an industry-provider

interaction is possible (or may be made possible through efforts of the

parties involved), it is not necessarily information that should or must

be shared if there are significant negative implications to its disclosure.

Much of the regulation aimed at diminishing conflicts of interest actually

regulates information exchange by setting standards for the types and

the timing of disclosures. The level of required disclosure implicates the

priorities that are placed on the information. To make informed value

judgments an inquiry into the value of disclosures must incorporate

questions around health care consumers’ need to know certain information,

how the information is made known, whether the need to know outweighs

the potential for unintended consequence of harming progress, and

ultimately, harming the health care consumer.

A. Disclosures that Unintentionally Tarnish the

Medical Profession

A primary consequence for a company accused of maintaining untoward ties

with physicians is diminished reputation in the public eye.29 “Critics aver,

and politicians echo that the most grievous casualty of conflict of interest—

indeed of even the appearance of it—is the public “Trust.”30 Public trust in

industry is not easily regained, although industry’s indiscretions are more

forgivable than those of a health care practitioner who has a longer way

to fall based on a long-standing public perception as a trustworthy and

upstanding professional.31

Although it has been suggested that pressure related to a managed care

system has the effect of “un-aligning” the interests of the health care pro vider

and consumer, physicians abide by the Hippocratic Oath, which bestows the

responsibility to do no harm and act in the best interest of the patient.32 This

is not to suggest that industry-provider interactions go unchecked based on

the assumed honesty of physicians, but rather highlights the sense of trust

that embodies the profession.33 As an illustration, physicians are held to a

high legal standard of care that incorporates a sense of dependency on and

regard for their knowledge and experience. Under the learned intermediary

doctrine, for instance, physicians are charged with acting as the liaison

between manufacturers and patients regarding the distribution and use

of pharmaceutical products.34 A recent case in Texas acknowledged that

“[i]f the doctor is properly warned of the possibility of a side effect and

is advised of the symptoms normally accompanying the side effect, it is

anticipated that injury to the patient will be avoided.”35 As a result of this

public trust in the profession, attempts to regulate conflicts of interest in

health care arose significantly later than efforts in other fields.36

As medicine becomes entangled in its function as a business, many questions

that conflicts of interest raise relate directly to the seemingly contradictory

role of the physician as a businessperson as well as a caretaker.37 Indeed,

it may be logical to suggest that collaboration in industry is another way

that “doctors escaped becoming victims of capitalism and became small

capitalists instead.”38 The role of a physician somehow entangled in

capitalistic pursuits tends not to sit well with the public. As a result, alarm

bells go off when we observe a physician motivated by the bottom-line or

an otherwise unseemly objective such as reputation of investment.

Disclosure allows affected parties to view industry-provider interactions

with “additional skepticism.”39 The first message that disclosure sends is

that the health care provider holds an interest that conflicts with another

goal in an industry-provider interaction. Insofar as the interests are managed

or negated under the rebuttable presumption view, disclosure reveals that

the physician has nothing to hide and as a result garners public trust through

mere openness.40 The second message that disclosure conveys, especially

if it lacks specificity, is that industry ties may influence a physician’s

decision-making in a way that makes the care received untrustworthy.41

Because disclosures incite suspicion of untoward behavior, they often lead

to severe prophylactic measures to ensure that health care professionals

behave in acceptable ways.42 These extreme measures may unintentionally

quell the exchange of information and the innovation that stems from this

exchange.

The Massachusetts legislature recently passed a bill that seeks to ban

industry gifts to doctors under the reasoning that the mere appearance of

impropriety is enough to warrant a severe restriction of an industry-provider

interaction.43 The curtailing of industry-provider interactions fails to take

into account the curbing of information sharing and exchange. As a result of

the distrust attached to their interactions with industry, health care providers

willingly reject fees and remuneration for their time spent consulting with

pharmaceutical drug or device companies in order to avoid suspicion that

may threaten their reputation.44 For example, a recent New York Times

article presented the stories of physicians who, after “intense scrutiny” for

accepting compensation for consulting or speaking with pharmaceutical

drug or device companies, now decline to accept any remuneration from

6Health Law & Policy

industry. One physician continued to pro-

vide services free of charge to a company

based on his belief that the work performed

for the company was vital to progress in

medicine.45 Another felt less incentive to

participate in these important interactions

without compensation for his time and

efforts.46

B. Disclosures That Devalue the

Information Exchanged

Insofar as a moral imperative to provide

the best possible health care exists, it

includes the duty to use the best possible

information available. When a drug or

device company possesses or learns of

data with respect to its product, it bears

a responsibility to share that information

with health care consumers through

physician intermediaries.47 Likewise

from the provider’s perspective, possessing clinical

data creates a duty to share that information with

manufacturers who are in the best position to use it in

a way that benefits patients. Thus, the fact that physi-

cians must balance losing fees or losing trust is not the

sole issue in sanctioning industry-provider interactions.

The health care system also risks losing opportunities

to share valuable information that promotes safe and

effective innovation in medicine and leads to more

informed prescribing and other decision-making.

Mistrust regarding the veracity and value of information

born out of interactions where a conflict of interest

exists is not exclusive to medicine, even though it has

a particularly detrimental effect in the field. Even the

specter of a conflict of interest raises questions about

the integrity of the information provided. Moreover,

information disclosed as part of an institutional policy

or under government regulation actually reveals

relatively little: it reveals only that the information

may be suspect.48 For these reasons, all disclosures

regarding conflicting interests should be accompanied

by a detailed summary of the circumstances of the

interaction.49

Details in disclosure that qualify the physician’s

expertise and time spent are necessary to ensure that

the data describes the interests of each party in a

meaningful manner.50 In this way, the circumstances

under which gifts are received, consulting or speaking

fees are paid, and other types of transfers are provided

in context and tell a more complete story about the

interests.51 The time frame during which the holder of

the interest invested in the company, the circumstances

and reasons surrounding this investment, and even a

pro-rated amount of the holding are all necessary to

provide a more meaningful set of data with which one

can make a more informed decision about the integrity

of the information. As another example, payments

made to health care providers for involvement in clinical

research are often based on the intricacy or duration of

the trial, providing a helpful context for payments that

may otherwise seem exceedingly large or inappropriate.

Further, the remuneration compensates for a physician’s

time spent away from his or her own practice, another

detail that puts payment schemes into perspective.

The key, therefore, is to ensure that the information

provided is meaningful in the sense that it reveals the

interest accurately. Providing context makes for a truly

full disclosure and provides a complete set of data with

which an affected party can more effectively analyze

and manage the competing interests.

Despite proper disclosure, the Brennan study suggests

an unconscious “impulse to reciprocate” for the donation

of items and services renders interactions between

industry and health care professionals by definition

unmanageable.52 Its basis in “soft sciences,” however,

has made the Brennan study vulnerable to skepticism,

especially amongst physicians. The theory can even

be viewed as insulting: few physicians are willing to

risk their professional reputation, let alone the health of

a patient, on the influence of a logo pad or pen.53 More

importantly, physicians generally rely on their training

and experience in their prescribing and decision-

making and are thus unlikely to be persuaded otherwise

in the absence of true scientific data. Unlike conflicts

of interest in other fields, a conflict of interest that arises

in health care is not merely an inquiry into whether

“reasonable onlookers would find it plausible that the

average person could be swayed by a temptation.”54

Physicians are held to a higher standard both legally

and ethically;55 demoting their clinical judgment to

that of the reasonable person seems in and of itself

unreasonable.56

Information for the purposes of managing untoward

interactions and disclosing conflicts of interests also

has the unintended effect of revealing industry-provider

interactions that lose their value when disclosed before

a specific period of time. Device manufacturers in par -

ticular tend to be smaller start-up companies with little

capital, but conduct research and development for

intricate and sometimes unknown techniques or

equipment. This type of innovation requires expert

knowledge and clinical experience that at times

only few possess: either the company’s investors

or specialists in a field. In addition, consulting or

researching arrangements are sometimes made with

physicians where the physician is so well known in

The health care

system also risks

losing opportunities

to share valuable

information that

promotes safe and

effective innovation in

medicine and leads

to more informed

prescribing and other

decision-making.

7Spring 2009

his or her community that disclosure of the interaction

will “tip off” competitors as to developing goals of a

company. Under the rebuttable presumption approach,

this situation makes the case for proceeding with an

industry-provider interaction despite a conflict of

interest. More importantly, it suggests that certain

disclosures may cause more harm than good when they

automatically de-value the purposes of an interaction

by negating a competitive edge.

V. Autonomy:

The Overarching InterestArguably, “[i]nappropriate industry influence may

be dangerous because it threatens to compromise

physicians’ judgment and prescribing patterns based

on gifts or monetary incentives about which patients

are completely unaware,”57 highlighting the value

of individual choice in the health care system.58

When individuals are able to consider personally the

implications that an interaction may have on treatment

received or other health care choices, the principle of

autonomy is maintained. Autonomy requires acquiring

permission to perform medical procedures, providing

ways to accommodate patient participation in treatment

choices, and otherwise diminishing the chances that

their person is abused.59 These examples encompass

a right that seems fundamental: the “right to know”

as much information as is available. The value placed

on the patients’ “right to know” in the context of

conflicts of interest mirrors its significance in health care

issues that are similarly value-based, namely, informed

consent and confidentiality of health care information.

That the U.S. health care system is a communal system

with a strong emphasis on individual rights justifies a

recent court decision finding that the free flow of ideas

is fundamental to research and science.60 The holding

that the patients had given up ownership rights to tissue

used in university research studies by granting consent

demonstrates how respect for autonomy sufficiently

mitigates the taking of individual information in pursuit

of greater knowledge.61 Indeed, the premium placed on

providing informed consent is so high that any trade-

offs associated with it, such as the physician’s time

spent supplying the requisite information, are generally

viewed as “de minimus or not worth analyzing.”62

Providing for autonomous choice in health care decision-

making protects research and choices in care that would

otherwise be viewed as unusable or compromised.

Likewise, without the disclosure of conflicts of interest,

a patient’s choice of treatment would not be truly

informed and industry-provider interactions would not

move forward in pursuit of improved health care.63

Disclosure of pertinent information enables health care

consumers to make more informed choices.64 Thus,

disclosure adequately manages conflicts of interest

because it provides for patient autonomy in health care

decision-making.

There are few cases of documented harm as a result

of conflicts of interest arising out of industry-provider

interactions. Instances where an individual is physically

or financially harmed when confidentiality of health care

records is breached are similarly negligible.65 Even the

recent breaches in confidentiality of “celebrity” health

records at the University of Los Angeles, California

Medical Center, where it would be foreseeable that a

person in the public eye could indeed be injured by the

leaking of health care information, left only the snooping

employees harmed through loss of employment or other

retribution. The outcome indicates that the breach itself

was the offense, not the loss of privacy or release of

information.66 Nonetheless, we continue to “mark”

health care records as confidential and to have strong

negative reactions when that interest is breached.67

Likewise, protection against even the idea of unseemly

behavior in industry-provider interactions is valuable

in making informed choices, whether or not tangible

“harm” is likely to occur. At the forefront of decisions

regarding the uses and the disclosures of health care

information is the sanctity of the individual’s ability

to make his or her own decisions about those uses and

disclosures. The balance is therefore based on needs:

the patient’s need not to have his or her information

disclosed takes priority over the need of an entity (other

than a covered entity authorized under Health Insurance

Portability and Accountability Act (HIPAA)) to use and

disclose the information.68 By protecting information

about an individual’s state of health, diagnosis, and

treatment, it seems that what we are actually protecting

is the long-regarded principle of autonomy.69

Health care records are confidential because they

contain information that we have determined is the

type of information that we must cover and conceal

to the greatest extent possible. Similarly, we must

balance whether the needs of industry or health care

professionals to keep information undisclosed to

prevent the unintended consequences described above

trump the needs of health care consumers to know

the information in those situations.70 The trade-offs

that occur when empowering health care consumers

with information must be considered to the extent

that they may harm the patient. Disclosures that lead

to unintended consequences, such as physician recusal

from interactions or other compromises that hinder

innovation, should be better managed because the

patient is at the receiving end of the information. In the

end, the information that is disclosed contributes to the

Providing for

autonomous choice

in health care

decision-making

protects research

and choices in

care that would

otherwise be

viewed as unusable

or compromised.

8Health Law & Policy

patient’s ability to make autonomous choices. As the

beneficiaries of new medical technology, especially

when providers are fully informed on its appropriate

dissemination, the welfare of patients seems to be one

objective that can trump the idea of fully informed

autonomy.

VI. ConclusionJerome P. Kassirer, former editor of the New England

Journal of Medicine (NEJM), acknowledges that “[a]t

present, the national mood favors individualism, profits,

and entrepreneurship.”71 The three major stakeholders

in industry-provider interactions, industry, health care

professionals, and health care consumers, all hold

basic interests: financial return, medical innovation,

and autonomy in health care. While seemingly

incompatible, these interests intersect in more ways

than they diverge when all stakeholders gain from the

promotion of these simultaneous objectives.72 When

conflicts of interest threaten to deter a health care player

from realizing its interest, disclosure of those interests

maintains the “status quo.”73 The key to enabling each

player to assess the risks and the benefits associated

with moving forward is finding a balance between any

competing interests and the disclosure thereof.74 To

the extent that unintended consequences are mitigated,

disclosure simultaneously promotes patient autonomy

while allowing medical innovation to move forward

through designated interactions aimed at sharing and

exchanging information about health care products

and ideas.

1 For the purposes of this article, these will be referred

to collectively as “industry-provider interactions.”

2 See Ehud Arbit, Correspondence, Academic-

Industrial Relationships, 353 NEW ENG. J. MED. 2720,

2720 (2005) (“Collaboration is the avenue to expediency

and high quality from which we can all benefit.”)

3 See Doctors Call For Kid-Sized Medical Devices,

MSNBC.com, April 23, 2008, http://www.msnbc.com/

id/24277116.

4 See Food and Drug Administration (FDA)

Comment on “Financial Conflict of Interest Disclosure

and Voting Patterns at Food and Drug Administration

Drug Advisory Committee Meetings” (analyzing

the data of a Public Citizen Health Research Group

study concluding only a “weak relationship” between

conflicts of interest and voting behavior of advisory

board members and that the exclusion of members with

conflicts would not change the vote outcome).

5 See Henry Beecher, Ethics and Clinical Research,

274 NEW ENG. J. MED. 1354 (1966) (presenting studies

where providers made treatment choices that advanced

their research interests and negatively affected the

health of their patients).

6 51 Cal. 3d 120 (Cal. 1990), cert. denied 499 U.S.

936 (1991).

7 No. 001885, Pa. C.P., settled Nov. 2, 2000.

8 See Moore, 51 Cal. 3d at 126-27.

9 See id. at 131-32 (reasoning that informed consent

includes the disclosure because an “interest extraneous

to the patient’s health has affected the physician’s

judgment is something that a reasonable patient would

want to know in deciding whether to consent to a

proposed course of treatment”).

10 See Testimony of William F. Raub, Dep’t of Health

& Human Services, before the National Institutes for

Health, Conference on Human Subject Protection and

Financial Conflicts of Interest, Aug. 15–16, 2000,

available at http://www.hhs.gov/ohrp/coi/8-15.htm

(noting that the events of the Gelsinger case

instigated the efforts of the conference, including

new requirements and guidelines regarding clinical

investigators and review of investigations).

11 See Tammy Meyer, The Role of Company

Representatives in the Operating Room – Are They

Exposed to Liability?, IADC Newsletter, October 2005,

at 1 (relaying that “the plaintiff’s attorney is sure to

discover” the presence of a manufacturer representative

in an operating room and may claim harm “‘as a result

of’ this practice”).

12 Harvard Docs: Bring on the Drug Reps, The Wall

Street Journal Health Blog, http://blogs.wsj.com/health/

2008/04/17/bring-on-the-drug-reps/?mod=WSJBlog

(April 17, 2008, 17:46 EST) (reporting on the

comments made by Dr. Dennis Ausiello, chief of

medicine at Massachusetts General Hospital and Dr.

Thomas Stossel, Harvard Medical School in opposition

to a proposed state ban of gifts to doctors from the

pharmaceutical industry).

13 See Annetine C. Geljins & Samuel O. Their,

Medical Innovation and Institutional Interdependence,

287 JAMA 72, 77 (2007) (describing the collaboration

of health care scientists and industry as an “intellectual

partnership” for working together to solve problems and

promote new research).

14 See Dennis F. Thompson, Understanding Conflicts

of Interest 329 NEW ENG. J. MED. 573, 573 (1993)

(highlighting the “asymmetry between interests” in

conflicts of interest in that “only one of the interests has

a claim to priority, and the problem is to ensure that the

other interests do not dominate”).

15 See, e.g., Barnaby J. Feder, New Focus of Inquiry

Into Bribes: Doctors, N.Y. TIMES, March 22, 2008;

Barry Meier, Implant Program for Heart Device Was a

Sales Spur, N.Y. TIMES, Sept. 27, 2005; Reed Abelson,

Possible Conflicts for Doctors Are Seen on Medical

Devices, N.Y. TIMES, Sept. 22, 2005; U.S. Picking

Up Pace of Device Inquiries: Probe to Focus on

Allegations of Fraud, Abuse, BOSTON GLOBE, May 19,

2004. In addition to media attention, recent cases such

as Gelsinger have brought considerable attention to the

issue. See supra note 7.

16 See Physician Payments Sunshine Act of 2008,

H.R.5605, S.2029, reintroduced in 2009, available at

http://aging.senate.gov/letters/ppsabill2009.pdf.

17 See Arlene Weintraub & Amy Barrett, Medicine in

Conflict, BUSINESSWEEK, Oct. 23, 2006, at 77.

18 Pharmaceutical Research and Manufactures of

America (PhRMA), Code on Interactions with Health

Care Professionals (effective 2009), http://www.phrma.

org/files/PhRMA%20Marketing%20Code%202008.pdf.

19 Advanced Medical Technology Association

(AdvaMed) Code of Ethics on Interactions with Health

Care Professionals (Sept. 2003), http://advamed.org/

NR/rdonlyres/61D30455-F7E9-4081-B219-12D6CE

347585/0/AdvaMedCodeofEthicsRevisedandRestated

Effective20090701.pdf.

9Spring 2009

20 Association of an American Medical Colleges (AAMC) Task Force on

Financial Conflicts of Interest in Clinical Research: Protecting Subjects,

Preserving Trust, Promoting Progress – Policy and Guidelines for the

Oversight of Individual Financial Interests in Human Subjects Research 7

(2001) (providing as an example of a compelling circumstance the situation

in human subjects research where an individual is so “uniquely qualified”

that the research cannot be conducted safely and effectiveness without his or

her involvement).

21 But see Daylian M. Cain et al., Coming Clean but Playing Dirtier:

The Shortcomings of Disclosures as a Solution to Conflicts of Interest,

in CONFLICTS OF INTEREST: CHALLENGES AND SOLUTIONS IN BUSINESS, LAW,

MEDICINE AND PUBLIC POLICY 108 (Don A. Moore et al., eds. 2005) (providing

for the respective benefits to stakeholders, but proposing that disclosure’s

effect may be “overestimated” because the information may not be

meaningful to those it is intended to affect).

22 See Bernadette M. Broccolo & Jennifer S. Geetter, ‘Health’ and ‘Life

Sciences’: The Inevitable Merger of Distinct Industry Sectors, 1 BNA’S LIFE

SCIENCES LAW & INDUSTRY 2 (2007) (accounting for increased government

interest in regulating the relationships forged between those life science

companies and health care providers, as related to the changed role of

government from a health care payor to an active health care purchaser).

23 See David A Shaywitz & Dennis A. Ausiello, Scientific Research With

an Asterisk, BOSTON GLOBE, April 29, 2008 (extolling on the importance of

industry-provider interactions in providing new treatments).

24 See, e.g. Robert S. Schwartz, et al., Editorial, Full Disclosure and

the Funding of Biomedical Research, 358 JAMA 1850, 1850 (2008)

(emphasizing that disclosure reporting is necessary in biomedical

research because “one cannot fully appreciate a study’s meaning without

acknowledging the subtle biases and interpretation that may arise when a

sponsor stands to gain from the report”).

25 Cf. Robert M. Tenery, Jr., Interactions Between Physicians and the

Health Care Technology Industry, 283 JAMA 391, 393 (2000) (asserting

the idea that industry goals compete with the best interests of health care

consumers).

26 See infra Section II.

27 See Guidance for Industry: Good Reprint Practices for the Distribution of

Medical Journal Articles and Medical or Scientific Reference Publication on

Unapproved New Uses of Approved Drugs and Approved or Cleared Medical

Devices, Feb. 2008, available at http://www.fda.gov/oc/op/goodreprint.html.

28 Id.

29 See, e.g., Statement by David Dvorak, Zimmer Holdings President

and Chief Executive Officer, Zimmer Announces New Compliance Model

(Apr. 17, 2008) (announcing the company’s steps to change its methods of

interacting with physicians to regain public trust after questions regarding its

interactions with orthopedic surgeons arose through alleged anti-kickback

violations, but maintaining that “[c]ollaboration with physicians will always

be critical to advancing medical technology that improves patients’ lives”).

30 Thomas P. Stossel, Regulating Financial Conflicts of Interest in

Medicine: A Solution in Search of a Problem, Presentation before the Hofstra

University Conference on Biomedical Ethics and the Law (Oct. 4–5, 2006),

in Medical Progress Today, Oct. 10, 2006, at Slide 2.

31 See Harris Poll, Doctors and Teachers Most Trusted Among 22

Occupations and Professions: Fewer Adults Trust the President to Tell the

Truth, August 8, 2006, available at http://www.harrisinteractive.com/harris_

poll/index.asp?PID=688 (ranking doctors as the most trusted profession with

85 percent of adults polled indicated they trust doctors to tell the truth).

32 See Kevin W. Williams, Managing Physician Financial Conflicts of

Interest in Clinical Trials Conducted in the Private Practice Setting, 59

FOOD & DRUG L.J. 45, 46 (2004) (asserting that the parallel pursuits of the

physician and the patient have now been altered under the managed care

setting that provides incentives for physicians based on the utilization and

reporting of services).

33 See Jerome P. Kassirer, Coming Clean but Playing Dirtier: The

Shortcomings of Disclosures as a Solution to Conflicts of Interest, in

CONFLICTS OF INTEREST: CHALLENGES AND SOLUTIONS IN BUSINESS, LAW,

MEDICINE AND PUBLIC POLICY 139 (Don A. Moore et al., eds. 2005) (“Unless

medicine is willing to give up its long legacy of public trust that avers that

doctors are performing in their patients’ best interests, the culture of ready

acceptance of the industry’s largesse must change.”)

34 See PAUL STARR, SOCIAL TRANSFORMATION OF AMERICAN MEDICINE: THE

RISE OF A SOVEREIGN PROFESSION AND THE MAKING OF A VAST INDUSTRY 26

(New York: Basic Books 1982) (highlighting the significant role of the

“gatekeeping authority” because it gives physicians the “purchasing power”

where “the authority to prescribe is the power to destroy”).

35 Ackermann v. Wyeth, No. 06-41774, slip op. (5th Cir. Apr. 24, 2008), at 6.

36 See Sheldon Krimsky, The Ethical and Legal Foundations of Scientific

‘Conflict of Interest,’ in LAW AND ETHICS IN BIOMEDICAL RESEARCH:

REGULATION, CONFLICT OF INTEREST, AND LIABILITY, 63, 63-64 (Trudo Lemmens

and Duff R. Waring, eds., 2006).

37 See PAUL STARR, SOCIAL TRANSFORMATION OF AMERICAN MEDICINE: THE

RISE OF A SOVEREIGN PROFESSION AND THE MAKING OF A VAST INDUSTRY 424

(New York: Basic Books 1982) (foreseeing the practice of medicine a “zero-

sum game” where competition drives physicians to make choices that may

not benefit the patient population).

38 See id. at 25-27 (describing physician collaboration with, rather than

against, insurance companies, hospitals, and other “bureaucratic organiza-

tions” that allows them to maintain their income and professional autonomy).

39 See Sheldon Krimsky, The Ethical and Legal Foundations of Scientific

‘Conflict of Interest,’ in LAW AND ETHICS IN BIOMEDICAL RESEARCH: REGULATION,

CONFLICT OF INTEREST, AND LIABILITY 63, 69 (Trudo Lemmens and Duff R.

Waring, eds., 2006).

40 See Dennis F. Thompson, Understanding Conflicts of Interest 329 NEW

ENG. J. MED. 573, 573 (1993) (noting that the regulation of conflicts of

interest upholds the integrity of and confidence in the profession).

41 See Sheldon Krimsky, The Ethical and Legal Foundations of Scientific

‘Conflict of Interest,’ in LAW AND ETHICS IN BIOMEDICAL RESEARCH:

REGULATION, CONFLICT OF INTEREST, AND LIABILITY 63, 69 (Trudo Lemmens and

Duff R. Waring, eds., 2006) (describing the effects of a conflict of interest

revealed only after harm has occurred, thereby lessening public trust).

42 See Thomas P. Stossel, Regulating Academic-Industrial Research

Relationships – Solving Problems or Stifling Progress?, 353 NEW ENG. J.

MED. 1060, 1063 (2005).

43 See Harvard Docs: Bring on the Drug Reps, The Wall Street Journal

Health Blog, http://blogs.wsj.com/health/2008/04/17/bring-on-the-drug-

reps/?mod=WSJBlog (April 17, 2008, 17:46 EST) (reporting on the strong

opposition taken by physicians who call the proposal “‘severe and vague,

[and] inviting . . . personal grievances to harass physicians . . . [and]

inevitably inhibit[ing] appropriate industry support’”).

44 See Gina Kolata, Citing Ethics, Some Doctors Are Rejecting Industry

Pay, N.Y. TIMES, April 15, 2008.

45 See id.

46 See id.

47 In the case of the medical device industry, manufacturers and providers

often forge vital relationships in order to provide effective and efficient

training for devices that would be useless or harmful in the hands of an

untrained professional. See Paul A. LaViolette, Medical Devices and

Conflict of Interest: Unique Issues and An Industry Code to Address Them,

74 CLEVELAND CLINIC J. MED. S26 (2007) (pointing to the interactive nature

of devices as making “critical” physician interactions with medical device

companies and calling for the implementation of the AdvaMed Code of

Ethics to manage those interactions).

48 There is also an argument that “[i]f everyone is disclosing, it’s as if

no one is disclosing.” In other words, the value of the information being

disclosed becomes a “mere formality.” See Arlene Weintraub & Amy Barrett,

Medicine in Conflict, BUSINESSWEEK, October 23, 2006, at 78 (quoting Dr.

Ezekiel J. Emanuel, chair of the Department of Clinical Bioethics at the

National Institutes of Health).

49 The Association of an American Medical Colleges and the Association of

American Universities (AAMC-AAU) Advisory Committee suggestion that

“[d]isclosure [of conflicts of interest] should be extended both in scope and

in audience” does not go far enough in providing the vital context need to

portray the conflict of interest as it truly exists. Its recommendation is limited

to disclosure of the type of interaction between industry and the health

care provider, but not specifics such as length or timing of remuneration or

duration of the interaction. See Protecting Patients, Preserving Integrity,

Advancing Health: Accelerating the Implementation of COI Policies

in Human Subjects Research, A Report of the AAMC-AAU Advisory

Committee on Financial Conflicts of Interest in Human Subjects Research,

February 2008, at 10.

10Health Law & Policy

50 See Testimony of Christopher L. White, Executive

Vice President, General Counsel and Secretary, The

Advanced Medical Technology Association (AdvaMed),

before the Senate Special Committee on Aging,

Surgeons for Sale: Conflicts and Consultant Payments

in the Medical Device Industry, February 27, 2008,

http://aging.senate.gov/events/hr188cw.pdf (suggesting

that disclosure legislation include the opportunity for

information providing context of an industry-provider

interaction because “[i]f sunshine is going to work,

then patients need to understand what they are looking

at and what it means”). Mr. White goes on to say that

failing to provide context for an interaction could

have the negative effect of discouraging physicians

from collaborating with industry, which “would be

a disservice to patients who are looking for the next

breakthrough in medical technology that could improve

their lives.” See id.

51 As part of its recent deferred prosecution

agreement, Zimmer must list its interactions with

physician consultants on its website. See supra, note 28.

The information required, however, includes only the

name, city of residence, amount and type of payment.

See Deferred Prosecution Agreement, Zimmer website,

para. 41, http://www.zimmer.com/web/enUS/pdf/

Zimmer_DPA.pdf. No other contextual information that

would create a more complete image of the interaction

is required. See Company Consultants – Identification

and Payments, Zimmer website, http://zimmer.com/

web/enUS/pdf/Company_Consultants5. pdf.

52 See Troyen A. Brennan, et al., Health Industry

Practices That Create Conflicts of Interest, 295 JAMA

429 (arguing that disclosure is ineffective in mediating

the influence of gifts, meals, lectures and conferences,

and samples because even the smallest influence is an

absolute manipulation of decision-making).

53 See, e.g., Harvard Docs: Bring on the Drug Reps,

Comments, The Wall Street Journal Health Blog,

http://blogs.wsj.com/health/2008/04/17/bring-on-the-

drug-reps/?mod=WSJBlog (April 17, 2008, 17:46

EST) (postings of Keith Hartman MD in Wisconsin

stating: “Frankly, I buy my own pens, but have learned

a great deal from pharm-industry seminars and even

some of the drug reps . . .” and Industry Must fight

back!! stating: “ . . . to say a pen or two from a pharma

company influences how a doctor treats his/her patients

is as ludicrous as it is demeaning and uninformed”).

54 Howard Brody, Correspondence, Academic-

Industrial Relationships, 353 NEW ENG. J. MED. 2720,

2720 (2005) (emphasis added).

55 See infra Section IVa.

56 Moreover, “what reasonable onlookers find

plausible on the basis of appearances is opinion, not

fact.” Thomas P. Stossel, Correspondence, Academic-

Industrial Relationships, 353 NEW ENG. J. MED. 2720,

2720 (2005) (responding to the points raised by Dr.

Howard Brody, see supra note 54).

57 Robert M. Tenery, Interactions Between Physicians

and the Health Care Technology Industry, 283 JAMA

390, 392 (2000) (emphasis added).

58 See BEAUFORT B. LONGEST, JR., HEALTH

POLICYMAKING IN THE UNITED STATES 52-53 (AUPHA

1998) (explaining that respect for autonomy, which

includes truthful information sharing, pervades health

policymaking).

59 See Cobbs v. Grant, 8 Cal.3d 229, 243 (Cal. 1972)

(holding that the physician has a duty of “reasonable

disclosure” of available treatment choices to the

patient).

60 See Washington University v. Catalona, 437 F.Supp.

2d 985 (E.D.Mo. 2006), cert. denied January 22, 2008.

61 But see Lori Andrews, Who Owns Your Body?

A Patient’s Perspective on Washington University v.

Catalona, 34 J. L., Med. & Ethics 398, 405 (2006)

(forewarning a chilling effect on research when patient

control over the use of donated information is not

enforced).

62 See Peter Schuck, Rethinking Informed Consent,

103 YALE L.J. 899, 939 (1994) (reflecting that “courts

tend to invoke the values of autonomy and decision-

making and then analyze the implication of those

values, while maintaining a silence on the issue of

costs.”)

63 See Cobbs v. Grant, 8 Cal.3d 229, 240 (Cal. 1972)

(quoting Prosser on Torts (4th ed. 1971) that consent is

necessary to meet the professional standard of care).

64 “True consent to what happens to one’s self is

the informed exercise of a choice, and that entails an

opportunity to evaluate knowledgeably the options

available and the risks attendant upon each.” Canterbury

v. Spence, 464 F.2d 772, 780 (D.C. 1972).

65 See Health Privacy Stories, Health Privacy Project,

March 5, 2007 (canvassing the “harms” befalling

individuals subject to a breach of health care records.

Very few of the harms include physical or proprietary

assaults).

66 See UCLA Hospital Employee Couldn’t Contain

Celeb Curiosity, The Wall Street Journal Health Blog,

http://blogs.wsj.com/health/2008/04/07/ucla-hospital-

employee-couldnt-contain-celeb-curiosity/?mod=

WSJBlog (April 7, 2008, 9:25 EST).

67 See Thomas Claburn, Government Report Finds

Health Care Privacy Breaches Rampant,

INFORMATIONWEEK, September 5, 2006 (reporting

that almost half of health insurance contractors and

Medicaid agencies experienced a privacy breach in

health care records, a statistic that Beth Givens, the

director of Privacy Rights Clearinghouse finds

“shocking” both because of the large number and the

nature of the data).

68 See Health Insurance Portability and Accountability

Act of 1996 (HIPAA).

69 See BEAUFORT B. LONGEST, JR., HEALTH

POLICYMAKING IN THE UNITED STATES 52 (AUPHA 1998)

(relating that the principle of autonomy as envisioned

by the founders of the United States arises in health care

in privacy rulemaking).

70 See supra, section IV.

71 Jerome P. Kassirer, Coming Clean but Playing

Dirtier: The Shortcomings of Disclosures as a Solution

to Conflicts of Interest, in CONFLICTS OF INTEREST:

CHALLENGES AND SOLUTIONS IN BUSINESS, LAW, MEDICINE

AND PUBLIC POLICY 139 (Don A. Moore et al., eds.

2005).

72 See David A Shaywitz & Dennis A. Ausiello,

Scientific Research With an Asterisk, BOSTON GLOBE,

April 29, 2008 (presenting the view of two physicians

that the “battle is not drug companies v. academics,

but rather between dreadful diseases and the medical

researchers who are trying to subdue them”).

73 See Cain, supra note 21 and accompanying text.

74 See Justin E. Bekelman et al., Scope and Impact

of Financial Conflicts of Interest in Biomedical

Research, 289 JAMA 454, 464 (2003) (suggesting that

conflicts of interest are here to stay and a “consensus

around a system of checks and balances to promote

medical innovation while improving oversight and

transparency” is necessary).

11Spring 2009

* Meredith Jacob is a pharmaceutical policy fellow at

the Program on Information Justice and Intellectual

Property (PIJIP) and a recent graduate of the

Washington College of Law. She would like to thank

Sean Flynn for his guidance and for the opportunities

that PIJIP has provided her.

I. OverviewThis model testimony is based off of specific testimony

Meredith Jacob has submitted to various state

legislatures advocating the passage of “Data-Mining”

legislation.

Dear Chairman and Members of the Committee:

I am pleased to submit these comments on the practice

of prescriber profiling and the sale of physician-

specific prescription data. My comments provide an

overview of the practice of prescription data-mining, a

review of legislation passed in other states to regulate

it, and an analysis of the recent decision of the United

State Court of Appeals for the First Circuit upholding

the New Hampshire data-mining restriction.

My name is Meredith Jacob and I am a pharmaceutical

policy fellow at the Program on Information Justice and

Intellectual Property (PIJIP) at American University

Washington College of Law. I am here on behalf of

the Prescription Project of Community Catalyst,

as well as the National Legislative Association on

Prescription Drug Prices. PIJIP’s associate director,

Sean Flynn, serves as counsel to the Prescription

Project of Community Catalyst and to the National

Legislative Association on Prescription Drug Prices.

These organizations strongly support the passage

of legislation to regulate “data-mining” by the

pharmaceutical industry.

II. The Use and Abuse of

Prescription Data-MiningThe practice of prescription data-mining dates back to

the early 1990s, when prescription records went digital

and pharmacy benefit managers (PBMs) became

widespread. These organizations sought to digitize

prescription records so claims could be expedited

through an online process, creating the possibility of

quickly transferring the records to others. Over the last

decade or so, a multi-billion dollar “health infor mation”

industry has emerged to buy prescription records from

pharmacies, PBMs and other intermediaries to compile

massive databases on the prescribing habits of nearly

every physician and other licensed prescriber in the

country.

The records are then used by pharmaceutical companies

to promote incredibly sophisticated marketing efforts

to doctors. Pharmaceutical companies use the records

to determine which doctors are more susceptible to

various kinds of sales messages, which doctors are

more prone to using new drugs, whether a doctor is

“brand loyal” to a certain manufacturer, and which

doctors should be rewarded for their prescribing

practices with high paying consultancies, advisory

board positions, and scholarships to “educational”

seminars. Data-mining has radically increased the

influence of marketers by allowing them to specifically

observe and reward the most profitable prescribing

practices while tailoring switching messages to those

not using desired products.1

Access to prescribing data stoked a massive increase

in spending and sales force size for individualized

marketing. According to the First Circuit’s examina-

tion of the record in the New Hampshire case, pharma-

ceutical companies spend at least $4 billion annually

on detailing to doctors.

In the decade after IMS Health Inc., a large Health

Information Organization, unveiled its flagship pre-

scriber tracking program in 1993,2 spending on detail-

ing increased by nearly 300 percent,3 doubling the

number of pharmaceutical sales representatives to

over 100,000.4 There is now one pharmaceutical sales

representative for every four to five office-based phy-

sicians in the nation. Because low prescribers often do

not receive sales attention, it has been estimated that

the effective ratio of sales representatives to targeted

doctors is closer to one for every 2.5 doctors. The aver-

age primary care physician in 2004 interacted with a

staggering 28 sales representatives each week.5

States are now acting to regulate this use of prescription

data for several core reasons:

First, prescriptions are part of medical records that

document private decisions made in the context

of the doctor patient relationship. Permitting

commercial use of these records improperly injects

marketing influence into the exam room.

TESTIMONY: THE STATE ROLE IN THE REGULATION

OF PRESCRIPTION DATA-MINING

Meredith Jacob*

Data-mining has

radically increased

the influence

of marketers by

allowing them

to specifically

observe and reward

the most profitable

prescribing practices

while tailoring

switching messages

to those not using

desired products.

12Health Law & Policy

Second, there is a large amount of data displaying

that drug marketers in the United States are exerting

undue influence over the prescribing practices,

which is contributing to irrational prescribing

practices that harm public health and unnecessarily

raise the cost of health care.

Third, access to this data is corrupting the medical

profession by allowing companies to use advisory

board appointments, consultancies and gifts as

direct payment for observed prescribing practices.

Finally, doctors themselves are pushing for

this legislation in many states because access

to individualized data is promoting the use of

harassing and vexatious sales practices in which

sales representatives attempt to hold doctors

“accountable” for gifts and promises as they race

toward the massive bonuses companies provide

to reps based on their ability to shift prescribing

practices.

All of these purposes provide ample justification for

state regulation in this area, regardless of any “free

speech” arguments raised by the industry.

III. State Regulation of

Data-Mining: First Circuit

Upholds the New Hampshire

Prescription Privacy ActNew Hampshire, in passing its Prescription Con-

fidentiality Act,6 was the first state in the nation to

ban the trade in prescriber-identified prescription data

for marketing purposes. Following the passage of the

New Hampshire Act, Vermont7 and Maine8 passed

laws that give physicians the right to opt-in or opt-out

of sharing their prescription records.

The first-in-the-nation prescription confidentiality

law in New Hampshire was recently upheld under a

constitutional challenge by the First Circuit Court of

Appeals. All three judges on the First Circuit agreed

that the law’s core purpose of curbing irrational

prescribing of higher priced drugs due to undue

influence of marketers was sufficient in itself to justify

any encroachment on the companies’ “commercial

speech” rights. Two judges held that the law did not

actually regulate any speech because prescription

records sold as a commodity on commercial markets

are subject to traditional economic regulation free

of any First Amendment inquiry. The third judge

thought that the law did affect the commercial speech

of detailers, by prohibiting them from informing their

messages with the records, but held nevertheless that

the law was adequately justified.9

The first area of inquiry for the First Circuit was

whether the use of prescriber-identifiable data should

be classified as speech. Here, the court found that the

use of data prohibited by the New Hampshire Act

constituted conduct, not speech. The Court reviewed

other cases where language-related activities were

regulated as conduct, rather than speech, and found

that in the case at hand there was “scant societal value”

to any informational component of the marketing uses

of prescription data.

The Court noted that, in this situation, information had

become a commodity, and could be regulated as such.

The sale of prescription data did nothing to increase

the free flow of information to doctors or patients, or

to inform their decision-making in the marketplace.

Finally, the Court reviewed precedent establishing that

state actions that made speech unprofitable did not

restrict speech, and observed that no provision of the

New Hampshire Act foreclosed publication or open

discussion of prescriber data.

IV. Creating a Full RecordAlthough the only circuit court to address the issue

unanimously held that states have every right to ban

the sale of prescription records to serve public health

concerns, the litigation in these cases indicates that

legislatures must carefully justify their actions to

survive court scrutiny. If anything, the risks of litigation

for the next state to act in this area have increased. The

pharmaceutical industry is now looking for a circuit

split so it can take this issue to the Supreme Court.

The most important thing this Committee can do—

other than carefully crafting legislation—is to create

a full and persuasive record displaying the reasons for

its action in this area. While data-mining legislation

should not be subject to First Amendment scrutiny,

the Committee should assume that a court may

differ on this opinion and that the law will have to

meet what courts term “intermediate scrutiny.” This

means that the law must directly serve a “substantial

government interest” and be reasonably tailored

to that interest. There is a wealth of documentary

evidence and expert testimony that can be brought to

bear on these issues.

Regulation of Data-Mining Prevents Undue

Influence in Pharmaceutical Marketing

States have a paramount interest in combating undue

influence of pharmaceutical marketers over prescribing

decisions. Nearly all direct-to-prescriber marketing

is one-sided because only the most expensive and

profitable medicines, that is branded blockbuster

Access to prescribing

data aggravates the

negative impact

of this one-sided

information market by

permitting branded

medicine marketers to

observe and reward

favored prescribing

behavior.

13Spring 2009

drugs, are marketed through in-person detailing.10

Access to prescribing data aggravates the negative

impact of this one-sided information market by

permitting branded medicine marketers to observe

and reward favored prescribing behavior.11 The most

favored prescribers can receive hundreds of thousands

of dollars in payments from drug companies for

speaking engagements, research, and sitting on various

advisory boards.12

Numerous studies and investigations have documented

a significant, measurable, and increasing influence of

direct-to-physician marketing by convincing doctors

to adopt prescribing practices that are contrary

to clinical guidelines and the weight of objective

scientific evidence.13 An exhaustive data synthesis

from over 500 published studies has found conclusive

evidence that pharmaceutical detailing guided by

access to prescribing data “impact[s] the prescribing

practices of residents and physicians in terms of

prescribing cost, non-rational prescribing, awareness,

preference and rapid prescribing of new drugs, and

decreased prescribing of generic drugs.” 14 The same

study concluded that meetings with pharmaceutical

representatives had a direct relationship to physician

requests to add drugs to a formulary that had “little

or no therapeutic advantage over existing formulary

drugs.”15

Data-Mining Fueled Marketing Increases

Cost Without Benefit to Patients

The aggregate financial costs to society of undue

influence by pharmaceutical marketers are enormous.

Many examples exist exhibiting the successes of the

super-charged pharmaceutical marketing system at

shifting massive amounts of prescriptions toward

newer, more expensive drugs that do not benefit

patients. In 2007, while generic medicines accounted

for 65% of prescriptions filled, generics were only

responsible for approximately 20% of prescription

costs.16 Reducing the non-medically appropriate

overuse of branded pharmaceuticals is essential to

controlling health care costs. Another study found

that approximately 40% of Pennsylvania Medicare

patients on antihypertensive therapy were being

prescribed medications at odds with clinical guide-

lines, at a cost of $11.6 million per year in that state

alone. Extrapolated to national levels, that same study

found that marketing-driven non-rational prescribing

costs the nation $1.2 billion for that class of drugs

alone. 17

Increased Prescription Costs Reduce

Access to Medicines or Force Patients to

Cut Spending on Other Necessities

Increased cost of medications has a direct effect on

patient health. In 2007, a review of medical literature

found that up to 32% of seniors took less medicine

than prescribed in an effort to reduce costs.18 When

data-mining drives the prescription of more expensive

alternatives, patients are needlessly forced to make

purchasing decisions that can endanger their health.

Data-Mining Accelerates

Unsupported, Overly-Broad Adoption

of the Newest Drugs

One of the clear effects of data-mining in marketing is

that it demonstrably shifts prescribing patterns toward

newer drugs. But now there is a growing awareness

that the rapid uptake of new drugs may threaten patient

health in many areas where older therapies should

remain the first line drugs of choice.19 Newer drugs

often have unknown side effects and less developed

safety profiles, in comparison to drugs that have been

on the market for significant periods of time.

This effect can be seen in the incredible marketing

push and resultant prescription surge for Vioxx,

Celebrex, and other COX 2 inhibitors, despite the lack

of any conclusive medical evidence that they were

more effective than older pain medications, or that

the reduction in gastric side effects were significant

for most patients. In the case of Vioxx, aggressive

marketing using prescriber data helped facilitate

the widespread adoption of a drug that was far more

dangerous to patient health than existing alternatives

or than the company’s marketing messages admitted.

Regulation of Data-Mining Maintains

Standards in the Medical Profession

Many physician organizations advocate an end to

prescriber-identified data trading for marketing

purposes because the practice threatens the ethical

standards of the profession and jeopardizes physicians’

relations with patients by permitting pharmaceutical

companies to give pecuniary rewards to medical

professionals based on their prescribing habits.

Gift bans and reporting are one good policy tool.

But it is difficult and perhaps impossible to ban all

payments to doctors by pharmaceutical companies,

because some legitimate roles exist for physicians in

clinical trials and other consulting roles. By banning

sale of prescriber data, we can eliminate payments to

physicians based on the drugs they prescribe, rather

than work they do.

Reducing the

non-medically

appropriate

overuse of branded

pharmaceuticals

is essential to

controlling health

care costs.

14Health Law & Policy

Regulation of

Data-Mining

Protects Doctors

Against Vexatious

Sales Practices

Doctors are pushing many

of the reforms in this area

in part because a substan-

tial number feel harassed

by the increasing fre-

quency and aggressive-

ness of detailing forces

fueled by the use of pre-

scribing data to track

prescription writing and

calculate sales bonuses.20

A host of federal and state

laws combat harassing and

frequent marketing calls

on consumers by limiting

marketers’ access to iden-

tifying information. In the

case of medicines, it is the doctors who make the purchasing decisions

for the ultimate consumers of the product; therefore, they receive the large

majority of all marketing efforts.

In addition to being harassing by its sheer volume, access to prescriber

histories increases the prevalence of coercive marketing practices in

individual sales calls. Sales representatives use this data in increasingly

obnoxious ways to hold prescribers “accountable” for their marketing

messages and gifts, including by telling prescribers that they are being

monitored and that the free lunches and gifts will dwindle if they do not

meet the marketers’ expectations.21

Regulation of Data-Mining Protects

Patient Privacy

Patients have the strongest possible interest in not having their treatment

histories subjected to surveillance and lobbying by pharmaceutical

companies. But this interest cannot be protected by the removal of patients’

names alone. Patient de-identification is not complete with the removal

of names and addresses. The data can still be used to track an individual

patient, identified with a unique numerical identifier that carries forward

through time.22 With access to prescriber identities and “anonymized”

patient data, a pharmaceutical company can observe a specific treatment

event for a particular patient, like the switching of a prescription, and

respond with an individualized marketing campaign at the prescriber to

change that treatment. This insertion of the pharmaceutical company into

the monitoring and influence of the patient’s treatment is an invasion of

privacy of the most odious kind: one that directly affects the treatment

course of the patient for the pecuniary interest of another through a breach

of confidentiality that is nearly impossible to detect.

Thank you for this opportunity to testify.

1 See, Carl Elliott, The Drug Pushers, ATLANTIC MONTHLY, April 2006, 90;

Liz Kowalczyk, Drug Companies’ Secret Reports Outrage Doctors, BOSTON

GLOBE, May 25, 2003, at A1.

2 IMS America Introduces Xponent, the First and Only True Prescriber

Level Prescription Sales Database, PR Newswire, February 9, 1993,

available at Lexis.

3 KAISER FAMILY FOUNDATION, TRENDS AND INDICATORS IN THE CHANGING

HEALTH CARE MARKETPLACE exhibit 1.20, http://www.kff.org/insurance/7031/

print sec1.cfm (2005).

4 Rayna Herman & Nick Dabruzzo, 2006 Access Report: The State of the

Selling Environment, PHARMACEUTICAL REPRESENTATIVE, July 2006, available

at http://www.pharmrep.com/pharmrep/article/article Detail.jsp?id=353927;

Puneet Manchanda & Elisabeth Hokna, Pharmaceutical Innovation and Cost:

The Effects and Role of Direct-to-Physician Marketing in the Pharmaceutical

Industry: An Integrative Review,

5 YALE J. OF HEALTH POL’Y L. & ETHICS 785, (2005).

5 Consumers Union; Prescription for Change,

(March 2006), http://www.consumersunion.org/pdf/drugreps.pdf.

6 N.H. REV. STAT. ANN. § 318:47 f (2006).

7 V.T. STAT. ANN tit. 18 § 4631 (2007).

8 ME. REV. STAT. ANN. tit. 22 § 1711-E (2007)

9 IMS Health, Inc v. Ayotte, 550 F. 3d. 42 (1st Cir. 2008).

10 See Marcia Angell, Relationships with the Drug Industry: Keep at Arm’s

Length, 338 BRITISH MED. J. 328, 2009.

11 See Elliott, supra note 1, at 82.

12 Gardiner Harris, et al., Psychiatrists, Children and Drug Industry’s Role,

N.Y. TIMES, May 10, 2007, see also Emily Clayton, Tis Always the Season for

Giving, CalPIRG, September 2004.

13 David Blumenthal, Doctors and Drug Companies, 351 NEW ENG. J.

MED. 1885, 2004; see also Dana Katz, et al., All Gifts Large and Small:

Towards an Understanding of the Ethics of Pharmaceutical Gift Giving, AM.

J. BIOETHICS, Summer 2003, at 39; Jason Dana and George Lowenstein, A

Social Science Perspective on Gifts to Physicians From Industry, 290 JAMA

252, 2003.

14 Ashley Wazana, Physicians and the Pharmaceutical Industry: Is a Gift

Ever Just a Gift?, 283 JAMA 373 (2000).

15 Id.

16 Prescription Sales Report 2008, Kaiser Family Foundation.

17 Michael Fischer & Jerry Avorn, Economic Implications of Evidence-

Based Prescribing for Hypertension: Could Better Care Cost Less, 291

JAMA 1850, 1854 (2004).

18 Becky A. Briesacher, et al., Patients At-Risk for Cost-Related Medication

Nonadherence: A Review of the Literature, 22 J. GEN. INTERNAL MED. 864

(2007).

19 Press Release, Drug Marketing Techniques May be Risking Patient

Safety, BRITISH MED. J. December 2, 2008; see also Sarah Balduf, Former

Pharma Pitchman: Beware of New Drugs, U.S. NEWS & WORLD REP.,

September 18, 2008.

20 David Grande, Prescriber Profiling: Time to Call it Quits, 145 ANNALS

INTERNAL MED. 751, 2007; see also Stephanie Saul, Doctors Object to

Gathering of Drug Data, N.Y. TIMES, May 4, 2006; Christopher Lee,

Doctors, Legislators Resist Drugmakers’ Prying Eyes, WASH. POST, May 22,

2007, Jake Whitney, How Drug Reps Know Which Doctors to Target: Big

(Brother) Pharma, NEW REPUBLIC ONLINE, August 29, 2006.

21 Gardiner Harris & Robert Pear, Drug Maker’s Efforts to Compete in

Lucrative Insulin Market are Under Scrutiny, N.Y. TIMES, January 28, 2006.

22 Jim Carroll & Taryn Foniri, Infuse Anonymized Patient-Level

Information into the Brand-Planning Process to Drive Profitable Growth,

IMS Health, Inc, June 1, 2006.

By banning sale of

prescriber data,

we can eliminate

payments to

physicians based

on the drugs they

prescribe, rather than

work they do.

15Spring 2009

The work of American Sign Language (ASL)/English

interpreters is filled with complex interpersonal,

linguistic, and cultural challenges. “Interpreting is

a discourse process in which interpreters are active

participants who need to . . . understand interactional

behavior as well as explicit ways in which languages

and cultures use language . . . interpreters make

inten tional, informed choices from a range of

possibilities.”1 The decisions and ethical dilemmas

interpreters face on a daily basis are countless and the

potential for disagreement regarding those decisions

is great. Technology Mediated Dispute Resolution

(TMDR)2 processes can be particularly helpful when

misunderstandings and conflicts arise. Conversely, the

communication skills that the Deaf Community and

interpreters employ routinely can provide valuable

insights for everyone who uses new technologies to

communicate and resolve disputes.

When a consumer or colleague believes a working

interpreter has violated the underlying principles and

guidelines set forth in the 2005 NAD-RID Code of

Professional Conduct (CPC),3 he or she may file a

grievance at the Registry of Interpreters for the Deaf

(RID), a national professional organization for sign

language interpreters and transliterators. The RID,

established in 1964 and incorporated in 1972, has

experienced a short history of vigorous growth and

development. The formative first eight years included

publication of the first Code of Ethics for sign language

interpreters. The Code is not revised often; the most

recent revision was approved and released in July,

2005. The 2005 NAD-RID CPC is now the document

professional interpreters, transliterators, and students

of interpretation look to for guidance.

The RID maintains a triad of programming which

includes the Ethical Practices System (EPS), the

National Testing System, and the Certification Main-

tenance System. These complementary programs

support and enforce the quality of service and ethical

behavior expected from professional Sign Language

interpreters. They include both the CPC and a mediation

system to address grievances filed against interpreters.

If mediation fails to resolve the conflict in a manner

that satisfies both the complainant and the working

interpreter (the respondent), then the complaint is

referred to a formal adjudication process.4 Mediation,

however, has become the core process of the EPS.

David Allen Larson previously addressed the

opportunities and dangers inherent in technology.

* An earlier version of this article appeared in

10 Cardozo J. Conflict Resol. 1 (2008).

** Professor of Law, Senior Fellow and former Director,

Dispute Resolution Institute, Hamline University

School of Law. Professor Larson was a member

of the American Bar Association’s E-commerce

and ADR Task Force, was one of the founders of

the International Competition for Online Dispute

Resolution (“ICODR”), created the ADR and

Technology course for Hamline University, and was

a U.S. West Technology Fellow. He is an arbitrator

for the National Arbitration Forum, was the founder

and Editor-In-Chief of the Journal of Alternative

Dispute Resolution in Employment (“CCH Inc.”),

was a Hearing Examiner for the Nebraska Equal

Opportunity Commission, and served as an arbitrator

for the Omaha Tribe. He is a Qualified Neutral under

Minnesota Supreme Court Rule 114. His other articles

discussing Technology Mediated Dispute Resolution

are available at http://ssrn.com/author=709717 and he

can be contacted at dlarson@hamline.edu.

*** Department Chair of the ASL & Interpreting

Department at the College of St. Catherine (CSC),

MA, CI, CT, NIC: Advanced. She has been in the

interpreting profession for over twenty-four years

and holds degrees in Educational Interpreting,

Human Service Administration/Human Resource

Development and Organizational Leadership with

a concentration in Alternative Dispute Resolution.

She currently serves on the Code of Professional

Conduct Review Committee for the National

Registry of Interpreters of the Deaf (RID) and was a

partner and co-founder of SLICES—an organization

that specialized in Sign Language Interpretation,

Consultation & Education Services. She has given

over 50 presentations, seminars and workshops

for interpreter practitioners on a variety of topics,

including conflict management and dispute resolution,

interpreter role and ethical decision making and can

be contacted at plgajewski-mickelson@stkate.edu.

TECHNOLOGY MEDIATED DISPUTE RESOLUTION

AND THE DEAF COMMUNITY*

David Allen Larson** and Paula Gajewski Mickelson***

16Health Law & Policy

Larson believes that Alternative Dispute Resolution

(ADR) practitioners and theorists must study the way

in which individuals increasingly use technology

to communicate. Those practitioners and theorists

then must determine how those technologies can be

integrated into dispute resolution processes most

productively. He offers three distinct reasons why

we need to approach technology in this manner: (1)

teens and preteens rely heavily on technology to

communicate and we need to become competent in

those technologies; (2) fuel prices continue to rise

and technology allows us to communicate effectively

without incurring travel expenses; and (3) security

concerns have made physical travel less convenient

and perhaps less safe.5

This article examines the mediation process within

the RID EPS and suggests when and how technology

may be utilized to enhance that process. Background

information regarding the interpreting profession,

the Deaf Community, and the process for filing and

reviewing grievances will provide a context for this

discussion. An overview of the technologies already

being used within the Deaf Community and the

interpreting field will help to determine where new

technologies can be introduced most effectively.

Each of the three steps in the EPS will be analyzed to

assess how additional technologies can be integrated

productively. Finally, peripheral activities surrounding

the EPS and mediation process will be identified,

highlighting elements in which technology may be used.

I. The Interpreting ProfessionAt its most basic level, interpreting is the process of

facilitating communication between two or more

parties who do not share a common language. The

work of ASL/English interpreters incorporates spoken

English and ASL or, in recognition of the linguistic

diversity within the American Deaf Community, a

variety of signed English and ASL. Researchers in

the field further define interpreting by addressing the

complex relational, linguistic, and cultural elements

inherent in an interpreter’s work and decision making

processes.6 For instance, Dennis Cokely defined

interpretation as:

The competent and coherent use of one naturally

evolved language to express the meanings

and intentions conveyed in another naturally

evolved language for the purpose of negotiating

an opportunity for a successful communicative

interaction in real time within a triad involving

two principal individuals or groups who are

incapable of using, or who prefer not to use, the

language of the other individual or group.7

In Cokely’s article, “interpreter” is defined as a pro-

fessional possessing cultural competence and linguis-

tic fluency who facilitates communication between

Deaf and non-Deaf individuals in a variety of set-

tings. Inherent in this definition are the complexities

illustrated in Cokely’s previously noted definition.

The generic term Deaf is used to represent consum-

ers of interpreting services in the United States who

use Sign Language to communicate. The term includes

not only members of the American Deaf Community

who use ASL, but also individuals who use a variation

of signed English.

Many people mistakenly assume that ASL is simply

English on the hands. Nothing could be further from

the truth, as is pointed out by Baker-Shenk & Cokely

(1980) in their timeless text for teachers of ASL and

Deaf Culture entitled American Sign Language: A

Teacher’s Resource Text on Grammar and Culture:

The vocabulary and syntax of English have

developed within a community of users who

can speak and hear. ASL, however, is a visual-

gestural language with its own vocabulary and

syntax. The vocabulary and syntax of ASL have

developed within a community of users who

rely upon their bodies and eyes. The differences

between these two languages in the areas of

vocabulary and syntax are significant.8

Interpreters work in a variety of settings including,

but not limited to, legal, medical, employment, social

service, and educational. The decisions interpreters

make in each of these environments can make an

indelible impression on the lives of those involved. The

depth of this impact is keenly assessed by Cokely:

As individuals, and certainly as interpreters/

transliterators, we face choices that can have

profound effects on other people and their

lives—choices of how we will act in certain

situations. The choices we make, and the

actions that follow from those choices, can

uphold or deny the dignity of other people, can

advocate or violate the rights of other people,

and can affirm or disavow the humanity of other

people.9

To say the work of interpreters is complex and

therefore ripe for conflict could be described as a gross

understatement. Nonetheless, interpreted exchanges

occur successfully a great majority of the time. There

are times, however, when consumers or interpreting

colleagues believe a working interpreter has made an

unethical decision warranting attention by the Ethical

Practices System (EPS) of the RID. When that situation

occurs, the objecting party can file a formal grievance.

To say the work

of interpreters

is complex and

therefore ripe for

conflict could be

described as a gross

understatement.

Nonetheless,

interpreted exchanges

occur successfully

a great majority of

the time.

17Spring 2009

The RID, the national professional organization of interpreters in the United

States, understands that conflicts can escalate into an experience that is

both unfortunate and harmful for all parties involved. The EPS Policy and

Procedures Manual points out that the RID encourages parties to make

every effort to resolve the conflict on their own. The parties should attempt

to clarify the dispute with one another and refer to the CPC and RID staff

for further assistance.10 RID also acknowledges that for a variety of reasons

some disputes may not be independently resolved and that individuals may

choose to file a formal grievance.11 The Manual is written in a first-person

narrative directly to the complainant and thoroughly describes the process

for filing a grievance.

A complaint, as defined in the Manual, must: (1) be based on the possible

violation of the official NAD-RID CPC; (2) be filed due to an incident

related to the provision of interpreting services; (3) describe an incident that

occurred after the interpreter’s services were contracted through a verbal or

written agreement, either on a paid or volunteer basis; and (4) be filed as

a result of the contracted interpreter’s conduct prior to, during, or after an

interpreting assignment.12

The complaint may be submitted in written English, or videotaped and

submitted in ASL, and must be received by the RID within 90 days of the

alleged violation.13 Once the complaint has been received, intake begins

(the first of the grievance procedure’s three processes: intake, mediation,

and adjudication). During the intake process, the complaint is reviewed

by RID national office staff and is either accepted because it meets all of

the conditions required of a complaint as defined above, or it is rejected

because it does not satisfy one or more of the same criteria.

Mediation is relatively new to RID. Mediation is a problem-solving

process in which a neutral third party engages the disputing parties in a

conversation, helps them define the problem, identify their interests and

work towards resolution. Mediators, unlike arbitrators and judges, do not

issue an award or render a judgment. Mediation became an integral part

of the grievance process in 1999 as a result of motions that were passed

by the membership and Board of Directors.14 The minutes from the 1999

convention reveal two reasons why the membership included mediation

in the grievance process: (1) the desire that grievances be processed in a

timely manner; and (2) the belief that ADR was the most cost-effective

approach.15 Although these reasons typically are relevant whenever one

considers any ADR process, TMDR processes are particularly well suited

to address these concerns.16

Since 1999, nearly 160 complaints have been filed against interpreter

practioners, with over 30 ending with mediated agreements.17 The

mediators are members of the National Association of the Deaf (NAD) and/

or the RID and are “interpreters and Deaf individuals who have completed

professional mediation training through RID. All of the mediators are fluent

in ASL and knowledgeable in Deafness and the interpreting process.”18

RID generally sends a team of mediators (frequently a Deaf person and an

interpreter) to each session and chooses the team based on their availability

and their geographic location.19 In an effort to increase the comfort levels

and respect the privacy of the complainant and respondent, RID tries to

send mediators from outside of the geographic region where the mediation

will take place.20

If a resolution is reached, then a mediation agreement is written by the

mediator, signed by both parties and filed with RID.21 The RID EPS

coordinator or designee monitors the terms of the agreement.22 Once the

terms are satisfied, the case is closed.23 If an agreement is not reached, then

a non-agreement form is signed by both parties and the original complaint

is referred to the next step in the grievance process, adjudication.24

A panel of three peer adjudicators evaluates the evidence of the alleged

violation and determines whether the action was in violation of the NAD-

RID Code of Professional Conduct.25 If a violation is found, then the panel

determines the necessary sanctions (in contrast to a mediator).26

Relying upon the preceding description of the interpreting profession, the

Deaf Community, and the grievance filing process this article will now

explore how technology can be further integrated into the RID Ethical

Practices System. Section II will analyze how technology is being used in

TMDR systems and then suggest how those technologies can be combined

with the technological advances already adopted in the Deaf Community

and interpreting profession.

II. TechnologyTechnology has not been embraced by alternative dispute resolution

practitioners. Regardless of whether dispute resolvers are intimidated by

technology, are creatures of habit, or simply are convinced that traditional

face-to-face approaches are more productive, neutrals are not recognizing

technology’s potential. There are certain populations and circumstances,

however, which are uniquely prepared for TMDR. The Deaf Community,

for example, has demonstrated that technology facilitated communication

can be very effective. Deaf people are well-positioned both to increase

reliance on technology in their own dispute resolution systems and to

teach other communities how technology can improve communication and

dispute resolution.

A. Technology and ADR

TMDR includes and expands upon the potential for problem solving offered

by online dispute resolution (ODR). Parties communicating online can send

e-mail, meet in secure online virtual spaces, chat using instant messaging,

exchange messages on listserves, stream video, or videoconference. ODR

systems can facilitate negotiation or mediation or they can offer virtual juries

and different arbitral processes.27 Some commentators still use the term

ODR even when online communication is used in combination with more

traditional offline forms of technology based communication such as fax,

telephone, and standard mail.28 Other terms have been used in the literature

to represent technology facilitated communication, such as computer

mediated communication (CMC) and information and communication

technologies (ICT).29 Technology Mediated communication (TMC) is a

term describing communication facilitated by technology. If one relies

on TMC to resolve a dispute, then he or she is engaged in Technology

Mediated Dispute Resolution (TMDR), a term that embraces the full range

of technology-based communication options as opposed to focusing solely

on online communications.30 For purposes of this paper, the focus on a

holistic view of the technology reflected in TMC and TMDR will be used

when considering the application of technology to the RID EPS.

18Health Law & Policy

The fact that

technology allows

parties to preserve

communications,

review them on

demand, and

perhaps correct or

further explain those

communications

can be invaluable

where two parties

are communicating in

different languages.

Technology can improve dispute resolution processes.

It does not take much imagination to recognize

that technology can save parties both money and

time. Additionally, certain individuals may be

more comfortable relying on technology mediated

communications rather than face-to-face exchanges.

The fact that technology allows parties to preserve

communications, review them on demand, and perhaps

correct or further explain those communications can

be invaluable where two parties are communicating

in different languages. When an interpreter, a Deaf

person, and a mediator (or a team of mediators) are

working together the parties are likely to communicate

in ASL. It is likely that ASL is not the native or natural

language of one or more of the parties. As a result, it

might prove very helpful if their communication can be

reviewed repeatedly or supplemented.31

There are, of course, challenges. When parties do not

have equivalent experience, access, or skills concerning

technology every effort must be made to minimize or

eliminate those disparities. When dispute resolution

system designers begin relying on video all parties

will need an infrastructure sufficient to support that

technology. The specific technologies employed must

be accessible to each individual.

When the Deaf Community does not participate in the

design of a technology based communication system,

that system may not be accessible. The accessibility

concern is shared by individuals with a wide variety

of disabilities. The danger is so real that on December

21, 2007, the U.S. House of Representatives responded

by releasing a draft of the “Twenty First Century

Communications and Video Accessibility Act.”32

This draft addresses, among other issues, hearing aid

compatibility, relay services, internet-based services and

equipment, universal service support, closed captioning

decoding (expanding requirements from televisions

with screens thirteen inches or larger to all video devices

that can receive or display simultaneously transmitted

video and sound), video description capabilities, digital

television technology compatibility, and conspicuous

first level on-screen menu access for closed captioning

and video description user interfaces.33

Technology can protect parties from uncomfortable

or threatening face-to-face confrontations and offer

vulnerable individuals a place where their communi-

cations can appear as forceful as the statements of

someone who is physically much larger and louder.

That said, technology is not a panacea and parties still

can be victimized.

Cyberbullying is a fact of life in Cyberspace. For

example, approximately one-third (32%) of the 935

teenagers surveyed by the Pew Internet and American

Life project report that they have been the targets

of behaviors ranging from annoying to potentially

menacing.34 The unwelcome conduct includes sending

threatening messages, forwarding e-mail and text

messages without consent, posting pictures without

permission, and spreading rumors online.35 Yet there

is evidence that virtual spaces provide more protection

from bullying than one finds in the physical world.

Two-thirds (67%) of the surveyed teens agree that

bullying and harassment occur more often offline than

online and less than one-third (29%) report that this

unwelcome conduct occurs more frequently online.36

Despite the relative safety that virtual environments

offer, cyberbullying is a very real concern and a danger

about which individuals must remain vigilant.

Parties sometimes believe that when they engage in

technology-based communications, as opposed to face-

to-face communications, they cannot create the trust

that may be required to resolve a dispute. While the

specific strategies and techniques employed by neutrals

to establish trust may have to be adjusted when working

in a virtual environment, principles and concepts basic to

any dispute resolution process still provide guidance.

Katsh and Rifkin assert that there are three fundamental

features that must be considered when developing

an ODR or TMDR system: convenience, trust, and

expertise.37 A convenient process must be accessible

both financially and physically and the process must

be user-friendly. Katsh and Rifkin recommend that,

“the convenience level must be set at the lowest

common denominator.”38

The parties must at some minimal level trust each

other, the technology, and the third-party neutral(s).

The importance of trust in this environment cannot

be overstated: “while a lack of convenience creates a

feeling of frustration, lack of trust results in a feeling of

risk.”39

Finally, a TMDR/ODR system must offer expertise. A

system that provides expertise does not simply produce

useful information. That system also will provide

a valuable process; a process that keeps the parties

engaged and moving towards a resolution.40 Collecting

and sharing information will not be sufficient. The

parties must believe that the technology adds value

beyond what they could accomplish on their own.

Katsh and Rifkin provide a graphic illustration of

this concept in the form of a convenience, trust, and

expertise triangle.41 The emphasis placed on each of

these three features, and thus the shape of the triangle,

will vary depending upon the parties involved and the

circumstances. If a problem is particularly troubling,

19Spring 2009

for example, then the parties may be willing to participate even though

the process is not particularly convenient. In this situation, the shape of

the triangle changes and becomes elongated. The convenience feature is

represented by the short side of the triangle and the trust and expertise

features appear as longer sides.42 The respective weights that are assigned

each feature require careful consideration.

B. Technology and the Deaf Community

Technology is not new to the Deaf Community. Deaf people have a long

history of creatively adapting technology to help them live in a non-Deaf

world. For instance, they use various visual signaling devices to alert

them to crying babies, doorbells, and phones ringing. They used caption

decoders before laws mandated that texting technology be included

in televisions. Deaf persons have long used various technologies to

communicate when face-to-face meetings were not possible.43

The first Teletypewriters (TTYs), also known as Tele communication

Devices for the Deaf (TDDs), were Western Union tele-

typewriters with a phone coupler attached.44 These

devices allowed Deaf people to use the telephone

and call others with similar machines, typing

messages to one another.45 TTYs provided

significant independence for Deaf and

hard of hearing individuals who no

longer needed to rely on others to make

telephone calls on their behalf. Despite

the benefits of TTYs, there also were

drawbacks. Typed conversations took

much longer to complete than spoken

communications. As a result, Deaf

people incurred higher phone bills,

particularly when they made numerous or

lengthy long-distance calls.46 This situation

eventually was remedied by legislation that

provided discounts on phone service to Deaf and

hard of hearing people.47

When cell phone and instant messaging users send cryptic

text messages to each other it might appear that nuance, tonal cues, and

emotional cues are sacrificed in exchange for speed and efficiency.48 Yet

if we look to the Deaf Community, we can see that cues are communi-

cated and that emotions, even subtleties, are not an inevitable casualty of

a text-based communication system. Long before a colon, a dash, and a

half parentheses conveyed a positive mood with a smiley face :-), the Deaf

Community was communicating emotion—ha ha (laughter), ILY (I love

you), OXOX (hugs and kisses) and SMILE (conveys you are smiling)—

and using “cryptic messages” as a strategy for making the TTY conversa-

tion more efficient—CUL (see you later), msg (message), mtg (meeting)

and NP (no problem).49

As a result of widespread adoption of e-mail, instant messaging, and text-

messaging (short message service known as SMS50), technology users

throughout society are learning how to communicate emotion in a text-

based environment. Individuals can use text-markers that underscore

or emphasize important ideas.51 Additionally, sensory words can create

images and a feeling of physical presence, for instance, when one states “I

feel,” “I sense,” or “you’ve got me scratching my head.”52 One should not

use sensory words indiscriminately and must be careful regarding

assumptions when communicating in a text-based environment. Braeutigan’s

examples include “I see” and “so, what I am hearing.” Message recipients

who are not able to see or persons who do not hear may not appreciate

references to senses they do not possess. If one makes sensory allusions

within a question rather than a statement, for example, and asks repeatedly

“Do you hear me?,” then that characterization may interfere with the effort

to build trust and rapport.

When the Americans with Disabilities Act (ADA) was enacted in 1990,

the Telecommunications section required that telecommunications relay

services be provided for people who are Deaf or hard of hearing.53 Telephone

relay services (TRS) employed hundreds of operators across the country,

connecting Deaf and hearing callers by reading what the Deaf caller typed

on their TTY and typing back to the Deaf caller what the hearing person

said. Over the last decade, however, TTYs have been moved

to storage closets as a back-up communication device

and have been replaced by pagers, Sidekicks,

and most recently, videophones.

In the mid-1990s, technological

advances offered a new twist on the

traditional relay service-video relay.

Deaf people used videophones and

the internet via high-speed services

to connect with a communication

assistant (a qualified interpreter)

who dialed the non-Deaf caller on

a traditional phone and interpreted

the call.54 The initial technology was

grainy and did not offer a very clear

picture, but that has since changed and

now many Deaf people are communicating

with each other via videophones and using

video relay services (VRS) on a daily basis.

The impact of this technology on the Deaf Community

cannot be understated. In the spring of 2007, the National Association of

the Deaf (NAD) and others hosted a demonstration of Video Relay Service

in the U.S. Senate and House of Representatives.55 The NAD President,

Bobbie Beth Scoggins, declared “[b]eing able to communicate in American

Sign Language when making telephone calls levels the playing field for

Deaf consumers. Interested persons attending the event will see how

VRS works firsthand and gain a greater understanding and appreciation

of its far-reaching value to the American Deaf community.”56 Scoggins’

comments are noteworthy in that they underscore an inherent advantage

realized in VRS services and videophones: Deaf people can communicate

in their natural language, American Sign Language. Although TTYs,

Sidekicks and other text-based technologies were appreciated and utilized,

those English language based devices required Deaf users to communicate

in literally a second language. Consequently, users confronted the same

challenges faced by other second language speakers and the risk of

misunderstandings and misinterpretations increased.

20Health Law & Policy

The exponential increase in the use of videophones

and VRS57 is only one example of how technology

has impacted the Deaf Community. The Community

also is finding an ASL-friendly medium in YouTube58

and V-logs.59 While YouTube contains postings from

both Deaf and non-Deaf people about a wide range of

topics, V-logs increasingly are being used to conduct

rich discussions about significant ASL and Deaf

Culture issues in ASL. V-logs are a form of blogs.60

Although V-logs, or video logs, can be used for a

multitude of purposes, Deaf individuals use V-logs to

post ASL messages they have recorded.

Although there is much talk in the Community about

the affordability of, and access to, high-speed internet

options for Deaf and hard of hearing people, the

equipment is readily available. Many VRS providers

offer Deaf consumers free videophones and education

on how to use the technology and VRS services.61

The services are free of charge to the end users

because the Federal Communications Commission

(FCC) administers the program that supports VRS and

reimburses providers on a per-minute basis for calls

processed.62

Larson describes Millennials as “digital natives in a land

of digital immigrants.”63 Deaf children are certainly

no different. In fact, in light of the opportunities that

technology offers, Deaf children may be even more

engaged with technology than their peers who are not

Deaf. Deaf children who are growing up in homes

with videophones and Sidekicks and posting V-logs

on the Internet may not worry whether there are TTYs

stored safely in the hall closet, “just in case.”

C. Technology and the Interpreting

Profession

The profound impact that technology and VRS have had

on the Deaf Community also is felt by the interpreting

profession. Many interpreters, particularly those who

interpret in their own private practice on a freelance

basis, have utilized various technologies both to stay

connected with their clients and to run their businesses

more efficiently. Technology’s impact on the

interpreting profession can be observed, for example,

in the June 2007 issue of the VIEWS, the monthly

newsletter published by the Registry of Interpreters

for the Deaf. The entire issue is devoted to technology,

distance communications, and video interpreting.

RID President Angela Jones’ article outlines the

different ways RID has embraced technology, which

includes forming Yahoo! groups64 for activities of

various committees and task forces, videophone usage

by all RID board members, the unveiling of a new

and improved RID website,65 and the implementation

of a policy regarding the use of traditional e-mail as

well as the use of video e-mail.66 Jones embraces

the message of John S. Parke, President and CEO

of Leadership Synergies, LLC, who declares: “As

technology continues to dominate our society, it is

vital for organizations—particularly nonprofits—to

stay ahead of the game. Board members of nonprofits

should recognize how some of the latest technology

could spur their organizations to new heights.”67

In the same issue, Weisenberg and Garcia offer

words of caution with regard to VRS and its impact.

They suggest that a history similar to that seen in the

industrial revolution may be repeating itself with the

advent of VRS, routinizing and depersonalizing the

work of interpreters.68 Recognizing that one must be

attentive to the short- and long-term implications of

VRS for the Deaf Community and interpreting, the

RID leadership nonetheless is modeling ways in which

technology can be used productively.

III. Technology and the RID

Ethical Practices SystemAs illustrated above, Deaf Community members

consciously, creatively, and routinely have adopted

various technologies in order to live in a non-Deaf

world. Many interpreters and neutrals, however, have

not been as proactive. Although some interpreters

and neutrals have embraced technology with a passion,

it is not difficult to sympathize with those who have not

adopted the most recent technologies. In light of the

pace at which technology is advancing, it sometimes

seems impossible to stay informed. Nonetheless, it is

important to consider the ways in which technology

can improve dispute resolution processes for everyone

involved—parties, neutrals, and interpreters. When

considering which forms of TMC could be used most

effectively in the RID EPS, one must focus on both the

people and the context.69

The parties most likely to be involved with disputes

processed by the EPS are Deaf people, non-Deaf

consumers, and interpreters. Deaf people, interpreters,

and neutrals involved in EPS mediations typically have

used some form of technology-assisted communication

in the past. Regardless of one’s initial comfort level

with technology, the RID is encouraging the use of

technology. Accordingly, it makes sense to explore

how technology mediated communications can be

integrated into the current EPS system.

Individuals participating in the EPS may have

dramatically different levels of experience and comfort

when it comes to technology. Consequently, a variety

of technologies must be available that lend themselves

In fact, in light of the

opportunities that

technology offers,

Deaf children may

be even more

engaged with

technology than their

peers who are

not Deaf.

21Spring 2009

to different combinations. EPS coordinators and/or the mediators first must

assess a party’s abilities concerning technology. Although the simplest

solution is to employ the technologies that represent the lowest common

denominator, one should not assume that the parties will be unable or

unwilling to be educated regarding more sophisticated technologies.

The Deaf Community is not populated by technophobes. The challenge,

in fact, may be to educate the interpreters, neutrals, and the non-Deaf

participants. Because Deaf people will be involved in nearly every dispute

resolution process, either as complainants, respondents and/or mediators,

videoconferencing and video-based technology appear to be most

compatible with the visual–gestural nature of ASL. Additionally, given the

popularity of video-based technology in the Deaf Community in V-logs,

videophones and VRS, it is likely that many Deaf people will have some

level of familiarity and experience with this technology.

Most video-based technology supports a synchronous process, allowing

disputing parties to communicate in real-time with each other and the

mediators. Asynchronous TMDR does have certain advantages, however,

which the RID EPS and participants should not ignore. An asynchronous

communication system provides opportunities for careful review before

a participant transmits a hurried message, lets heated and unproductive

emotions cool, allows for research and consultation before each

communication, and creates flexibility and convenience when it comes to

scheduling and participation.

There are disadvantages to an asynchronous system. For example, anyone

who has sent an e-mail message and, while waiting for a reply, felt his

or her emotions drift from eager to puzzled to anxious to irked to angry

can appreciate one of the difficulties associated with asynchronous

communication. When one party does not reply promptly and does not

provide an explanation for the delay, a conversation that was developing

productively can instead deteriorate rapidly.

A dispute resolution process designer should invest the time necessary

to identify specifically the advantages and disadvantages of each TMC

option. The process available for each dispute does not need to be

identical. Nonetheless, in light of the Deaf Community’s familiarity with

technology, disputing parties usually should be given synchronous, video-

based communication options as well as the opportunity for asynchronous

communication. Videophones, for example, can be incorporated into the

Ethical Practices System.

Videophones have specific system requirements that must be satisfied in

order for the technology to function properly. Each VRS service provider

makes recommendations regarding the specific requirements needed to

support their service. All the service providers are governed by the FCC.70

The FCC requires videophones to be compatible across systems.

According to CSDVRS,71 computers must have: Pentium III–800 MHz or

higher processor, 8MB video card (16 MB video card is recommended),

16K color (minimum), 256 MB RAM, 20 MB free disk space, USB based

web cam, cable, DSL, or other broadband Internet connection.72 The

minimum Digital Subscriber Line (DSL) or cable speed needed to support

VRS are 256 Kbps upload and download speed; 256kbps upload and

download speeds or higher are recommended for optimal use and clarity.73

The web cameras CSD VRS recommends include the Logitech Quickcam

for Notebook Pro or the Logitech Quickcam Pro 4000 or 5000.74 The

camera must have a CCD sensor—CMOS sensors are not recommended

because they may slow down the videoconference capabilities.75 Sorenson

VRS manufactures the Sorenson VP 100, Sorenson VP 200, and the i2eye

D-link videophones that they exclusively distribute.76 The Active X and

Net Meeting software also are required to support VRS calls and may be

downloaded via a link available on the CSD VRS website.77

Other videoconferencing technology may be an option when considering

TMDR and RID. For example, the College of St. Catherine in St. Paul,

Minnesota uses a Tandberg 3000 MXP Video Conferencing System, which

provides excellent quality video transmission for ASL users to communicate

from distant locations.78 The connection is made via Internet2, which

provides greater capacity and much faster connectivity than the regular

Internet.79 The system supports direct point-to-point connections; bridging

technology is available that will allow multiple sites to connect.80 This

Internet2 system functions at about 1500 MHz and is available at most

Level 1 educational institutions and some businesses.81 Although one

could construct a similar technology infrastructure, one also could simply

create partnerships or negotiate a license for limited access at colleges and

businesses.82 Additionally, videophones could be used immediately to

support mediations within RID’s Ethical Practices System without having

to develop an independent infrastructure.

Finally, Communication Service for the Deaf (CSD) is a non-profit

agency serving Deaf and hard of hearing people in offices located across

the country. They currently use videoconferencing systems for point-to-

point connections. These systems also can be used in the EPS. The CSD

videoconferencing systems use Polycom systems or IP-based systems using

h.323-based technology.83 The Polycom PVX system is a personal video

conferencing solution that extends the quality of h.323 videoconferencing

to the user’s PC and webcam.84

A. Recommendations for the RID Ethical Practices System

Certain communities and populations are well positioned to integrate more

technology into their dispute resolution processes. The Deaf Community

is one of those communities. While it is important to identify communities

that are prepared to increase their reliance on technology, that identification

should not end the inquiry. It also is important to take the next step and

provide specific examples of how technology can improve a community’s

dispute resolution process. This section describes the RID Ethical Practices

System and then makes recommendations as to how technology can

improve those practices concerning intake, mediation and adjudication

i. Intake

There are several ways in which technology could improve the intake

process. First, the initial stage of intake would be improved if greater

information about the EPS, including the EPS manual, was provided in

ASL and in a video format. Second, notice that is currently sent via post to

inform parties about whether a complaint is accepted into the system for

further processing or is rejected could be more efficient if it is also sent by

e-mail.

22Health Law & Policy

a. Recommendation One

Complainants typically access the EPS Policy and

Procedures manual online via the RID website.85

Forms can be printed off the website, completed, and

sent to the RID National Office, or complainants can

videotape responses to the introductory questions and

submit their complaint via videotape.86

This initial stage would be improved if greater

information about the EPS, including the EPS manual,

was provided in ASL and in a video format. Video

clips of a Deaf person explaining the intake process,

the mediation process, and other parts of the manual

in ASL would make the information more accessible

to a critical target audience. Furthermore, this format

also would help alert more potential users that the EPS

exists. Video and digitally-based technology would

increase consumer awareness and lead to greater

utilization of the process.

b. Recommendation Two

When a complaint is received, it is reviewed based

upon explicit criteria. The complaint must be based on

the possible violation(s) of the official NAD-RID CPC

and must be related to the provision of interpreting

services.87 Additionally, it must describe an incident

that occurred after the interpreter’s services were

contracted through a verbal or written agreement and

can involve paid or volunteer interpreter service.88 The

complaint may be filed as a result of the contracted

interpreter’s conduct prior to, during, or after an

interpreting assignment.”89 The complaint will either

be accepted into the system for further processing

(which could include a mediation referral) or rejected.90

The complainant always is notified by letter as to the

disposition and, if the complaint is accepted, then both

the complainant and the respondent receive letters

explaining the subsequent steps in the process.91

Although this approach may be adequate, it could be

improved. Because there still are legitimate concerns

regarding whether everyone has convenient and

affordable access to technology, it may be prudent to

continue providing written notice. Sending the notice

as a hard copy letter underscores the importance of

that information. Additionally, sending a printed letter

creates documentary evidence should a question later

arise as to whether appropriate notice was provided.

Nonetheless, it would be helpful to also send the notice

via e-mail or even text message because, assuming that

many individuals are like the authors of this article,

the mail that receives our attention first every day is

our e-mail and text messages, not our postal service

delivered paper mail.92 In addition to initial notice,

both the complainant and the respondent should be sent

case status updates via e-mail. The updates can be sent

as simple textual e-mail messages or can be provided

in video form.93 Furthermore, if an important deadline

or significant issue arises, then a person-to-person

videophone call may be the most effective medium.

ii. Mediation

The process of mediation could also be vastly

improved by technology. First, using the RID website,

which includes calendars and other logistical services,

can be helpful in coordinating the schedules of the two

parties, a mediator, and anyone else who is involved in

the process. Second, the EPS manual, which parties are

encouraged to review thoroughly before a mediation,

could be available on a website along with internet

links to various sites offering tools to help parties

prepare for negotiations. Third, necessary logistics for

mediators who travel from out-of-state could be vastly

improved through the use of technology. Finally, if the

parties and the mediator are not in the same location,

then final arrangements for settlement will proceed

more expeditiously if the Mediation Agreement form

is circulated among the parties via e-mail attachment

or fax.

a. Recommendation One

Logistics for scheduling mediation sessions currently

are coordinated by national office staff or the EPS

coordinator.94 Information is shared via numerous

e-mail and phone communications, including both

telephone and videophone. Although it is com-

mendable that videophones are used for scheduling,

this use is expected. Schedules can be arranged more

efficiently if one adds additional tools. Calendars and

scheduling demands for each session can be placed in

a secure area of the RID website. Passwords then can

be sent to each party so that he or she can access the

information on demand.

Furthermore, a video introduction in ASL can be added

for each case. This introduction could be presented

by the mediators themselves. The introduction might

simply take the form of a greeting and a personal

introduction from the mediators or could serve a much

more substantial function. In a typical mediation,

after the parties and the mediators are introduced to

one another mediators provide an orientation; an

explanation as to how the mediation will proceed.95

Mediators take this opportunity to provide information

that usually includes a procedural outline for the session

contractual, statutory, and common law confidentiality

requirements; and an explanation of the mediators’

role and responsibilities.

If the video introduction features the mediator in

person, then the video will inform the parties as to

Mediations will be

most successful

when the parties’

substantive and

procedural interests

are addressed

as effectively as

possible. When

the parties have

expressed a strong

preference for using a

particular technology,

then a mediator

who cannot use that

technology is not the

appropriate person to

assist those parties.

23Spring 2009

the mediator’s appearance and demeanor. The parties will have a clearer

image of the person with whom they will be dealing. This introduction

may help the parties begin to feel more comfortable and secure about the

upcoming mediation session.

A mediator, however, may be uncomfortable personally appearing in a

video. If that is the case, then the mediator should consider presenting his

or her introduction as an avatar, a three-dimensional person or creature

created to “live” in cyberspace.96 Video and animation technology has

advanced to the point that attractive, surprisingly lifelike avatars can be

created easily. For an excellent example of an avatar using ASL, albeit

in a different context, one should view a video created by Vcom3D and

Gallaudet University.97 Companies such as Inperson allow users to create

videos that can be used by anyone with an internet connection.98 VIDITalk

lets users create videos that can be e-mailed or streamed to websites and

“virtually any mobile device.” 99

There are several advantages to presenting a video introduction. The

introductory video, which will be available on demand, can be reviewed

repeatedly by each party to ensure that he or she understands the mediator

and is prepared for the upcoming mediation. Although introductions

must be tailored to each dispute and the specific parties, much of the

information conveyed in an introduction is rather generic. For example,

unless there has been a change in the law or ethical requirements regarding

confidentiality or the parties have unusual confidentiality requirements

articulated in their mediation agreement, that part of the introduction will

be fairly standard. Once a video introduction is prepared, the introduction

can be saved and edited for future mediations.

One of the dangers of presenting the same information repeatedly in real

time is that a mediator might lose track of what he or she has said “this time”

and forget that he or she has not provided information that is ordinarily

provided. A thorough repeatedly vetted video introduction that is reviewed

and adjusted to fit each case would avoid this problem.

Recognizing that the emphasis must be on the parties and the dispute itself

does not mean that one should ignore the fact that a reusable editable video

introduction could prove to be efficient for the mediator. The temptation

and concern is that a mediator will not take the necessary time to review and

edit the video to make certain it is not only appropriate, but is as helpful and

productive as possible for each unique dispute. This concern is not a reason

to abandon the tool—it merely is a caution and a call to be responsible.

The fact that the parties can review the introduction repeatedly will

help them become more comfortable with video technology. Additional

technologies can be explained and illustrated on the video. A video

introduction can remind the parties that mediation is not a punitive process,

a perception which could lead to frustration and hinder the process. The

notion of using a video introduction for a mediation session may make some

mediators aghast. But mediators should not allow their own unfamiliarity

or discomfort with technology to deprive parties of the technological tools

that serve the parties most effectively and productively.

The authors believe that mediators work hard to listen actively, to

identify parties’ desires and concerns, and respond to parties’ needs. As

uncomfortable as a mediator may be when it comes to technology, that

mediator should not avoid using tools that may facilitate resolution. If a

mediator does not feel competent using a particular technology, but the

parties themselves would like to use that technology, then the mediator

should seek technical assistance. Such assistance should not compromise

the mediation process because the individual who is skilled at using

technology need not participate in the mediation or have access to confiden-

tial information in order to assist the mediator. The difficult question is

what should happen if the mediator cannot find adequate assistance or

is unable to master the technology. Mediations will be most successful

when the parties’ substantive and procedural interests are addressed as

effectively as possible. When the parties have expressed a strong preference

for using a particular technology, then a mediator who cannot use that

technology is not the appropriate person to assist those parties.

Each case must be assessed initially and then continually throughout the

process. There will be cases where the parties themselves will want to avoid

technology because they are uncomfortable with, inexperienced regarding,

or distrustful of technology-mediated communications. The parties should

not be forced into TMDR. Mediators must recognize that many members

of the Deaf Community are very experienced using technology and often

will be receptive to the idea of using technology such as video introductions.

If a mediator has reservations, then that mediator should keep in mind that a

video introduction does not preclude subsequent real time communications

regarding the introduction.

In fact, if a video introduction is used, then it is incumbent upon the

mediator to follow up and ensure that his or her message was understood.

In this respect, the video introduction offers a wonderful opportunity to

identify questions and issues, explore those concerns, and answer questions

as completely as possible in advance of the formal mediation session. This

is preferable to quickly pushing through those concerns on the day of the

formal session in a rush to get the “real” mediation session started.

b. Recommendation Two

The EPS manual instructs parties not to prepare evidentiary artifacts or other

items that normally would be seen in a courtroom.100 Parties are encouraged

to review the entire manual in preparation for the session.101 In addition

to merely reading the EPS manual, parties also should be encouraged

to prepare for the mediation by reviewing their case, clarifying their

concerns (their interests), considering their priorities, identifying possible

solutions, and noting issues about which they are willing to be flexible and/

or compromise. These additional suggestions can be communicated by a

brief ASL description on the website, for instance, with internet links to

various sites offering tools to help parties prepare for negotiations.102

c. Recommendation Three

Participants in EPS mediation sessions include the complainant,

respondent and most often two RID mediators. The mediation usually

is held in a location convenient for the complainant and respondent. The

Deaf Community is relatively small compared to the general population

and the EPS system attempts to protect parties’ privacy interests and ensure

the parties are comfortable with the process. In an effort to achieve these

goals, typically mediators from outside the region are retained and all

travel expenses are paid by the RID.103 A mediation session generally is

scheduled for an entire day, and occasionally even for two days if the issues

appear complex or particularly difficult.

24Health Law & Policy

A variety of technologies can be employed to make the process more

effective and efficient. As mentioned earlier, the mediator’s introduction in

ASL can be recorded in video and posted in a secured location on the RID

website. The video presentation also can be e-mailed directly to each party.

This asynchronous form of communication offers the mediator more time to

plan how he or she can communicate concepts clearly and concisely in ASL

and provides the mediator with the luxury of erasing and re-recording. If

a mediator’s introduction is confusing or misleading, then it may establish

an unproductive tone for the entire session.

Synchronous tools, such as videoconferencing and bridging technology,

can be used to connect the parties and mediators in different locations and

allow them to conduct the mediation in ASL. The places where the parties

and mediators will be located at the time of the mediation must be deter-

mined in advance to ensure that everyone has access to the necessary tech-

nologies. Both synchronous activities, such as caucuses, and asynchronous

communications can be accomplished using videophones, video e-mail,

traditional e-mail, instant messaging, or other appropriate technologies.

Because mediators located outside the region typically are retained in

order to protect the parties’ privacy interests and to make the parties more

comfortable with the process, travel expenses can be significant. Greater

reliance on technology can result in significant cost savings.

d. Recommendation Four

When EPS mediation results in a settlement, a Mediation Agreement form

is completed by the mediator and signed by both parties.104 The RID

EPS coordinator or designee monitors the terms of the agreement and,

when he or she is satisfied, officially closes the case.105 If an agreement

is not reached, then the case is referred to the next step in the EPS, the

adjudication process.106

If the parties and the mediator are not in the same location, then final

arrangements for settlement will proceed more expeditiously if the

Mediation Agreement form is circulated among the parties via e-mail

attachment or fax. Signatures may be added and faxed back to the RID

office or the parties can agree that electronic signatures are sufficiently

binding and exchange copies via e-mail. Although not necessary, hard

copy originals subsequently can be circulated using the US Postal Service.

If an agreement is not reached, then the parties can receive updates via the

designated website space for their particular case through videophone or

video e-mail. They also can assess whether they would like to continue

to mediate the case.

iii. Adjudication

The EPS provides that if a mediation effort is unsuccessful, then a panel

of three peer adjudicators will review the original complaint and response

and render a final decision.107 If the panel determines an ethical violation

occurred, then it decides what sanctions should be imposed.108 Generally

the adjudicators do not meet with the parties.109 There are times, however,

when additional clarification or information is needed and the adjudicators

will schedule a hearing with the parties prior to rendering their decision.110

Again, videoconferencing technology, videophones, video e-mail and text-

based technology also can be used throughout the adjudication stage. Text-

based technology, such as instant messaging, can be used to connect the

parties and the adjudicators.

iv. Mediator Support

All of the mediators in the RID Ethical Practices System possess specialized

skill and knowledge in ASL, Deaf Culture, and the interpreting process

in addition to the skills they possess in mediation and ADR practices.111

Yet even for these highly skilled individuals, ongoing educational

opportunities (and requirements) can improve performance. Although

continuing education activities have been offered, these opportunities

have been infrequent (probably because of time and cost). Workshops and

seminars offered on-line or utilizing distance learning technologies could

increase the offerings made available in a cost effective manner.

a. Recommendation One

The RID should use technology to provide more educational opportunities

and better support for its mediators. The RID could offer a class to mediators

and adjudicators in remote locations by using teleconferencing equipment

to support live interaction or they could host a class in a virtual world,

such as Second Life112 or There.com.113 In these venues the neutrals could

join the class as avatars and interact with instructors and each other. This

medium would allow neutrals to attend an interactive class from anywhere

in the world with internet access. The neutrals would not have to worry

about travel costs and the RID would not have to worry about how many

individuals will invest travel time and costs. Just as importantly, presenting

a class in a virtual world would provide a risk-free opportunity for mediators

and adjudicators to experiment and familiarize themselves with virtual

world interactions. This experience would help prepare mediators and

adjudicators to provide dispute resolution services in a virtual world.114

A self-paced online course also could be offered.115 It could be made

more interactive by inviting participants to post messages on a listserv or

join a chat room. The RID website can host a secured V-log for mediators

and adjudicators where the neutrals can articulate their questions, concerns,

or dilemmas and solicit peer support or consultation. Mediators and

adjudicators who will be serving on panels can use this technology to

meet and prepare for upcoming sessions, exchange information during

the proceedings, and debrief afterwards. This technology can be used to

provide peer mentoring and support for new mediators and adjudicators

who are brought into the system. Video also can be used to provide general

information to the public. Videos can be uploaded and shared easily on

websites such as Vimeo.116

b. Recommendation Two

The RID should consider how it can use technology to improve its support

for and delivery of consumer education. Practicing interpreters, students

of interpreting, and both non-Deaf and Deaf consumers alike could benefit

from information on the website (or accessible on demand in another

medium) that addresses specific questions about conflict, conflict resolution

and the grievance process. The RID could maintain a Frequently Asked

Questions (FAQ) link, for example, similar to the links provided by most

commercial retailers operating online. The RID can use technology to

distribute and communicate information about conflict management and

25Spring 2009

resolution and thus empower individuals and entities to resolve conflicts

before they escalate into a dispute requiring mediation.

IV. ConclusionThe Deaf Community and the interpreting profession have been affected by

technology in immeasurable ways. Deaf people today are communicating

in unprecedented manner and frequency. Video-based technologies, for

example, allow individuals to communicate across the globe using a

natural, visual language.

When interpreters serve as the communication link between Deaf people

using ASL and non-ASL users, conflicts can arise and there is a very real

need for dispute resolution options. The Ethical Practices System of the

RID is an excellent option for resolving disputes that escalate into grievances.

Greater reliance on technology, however, can improve the EPS.

Technology allows parties and neutrals to communicate in a variety of

mediums quickly and inexpensively. An individual at a remote location

can communicate by sending real time video images of him or herself. The

videos can be saved and made available on demand. Parties and neutrals

can agree to meet in virtual worlds such as Second Life and There.com

and present themselves as three dimensional avatars. V-logs, e-mail,

instant messaging, and chat rooms can facilitate information exchange and

relationship building. The RID can dramatically expand its educational

efforts by presenting online continuing education courses for mediators

and adjudicators, including support and mentoring services for both new

and experienced neutrals. The RID also can create a Frequently Asked

Questions (FAQ) link for both consumers and neutrals.

This article addresses a variety of topics ranging from interpreting to

ASL and the Deaf Community to ADR and technology, and makes

specific recommendations for the RID Ethical Practices System. The

recommendations list is not exhaustive. The authors hope that this article

will inspire further discussion regarding additional technologies that can

be integrated into the EPS and also further conversation regarding the role

of technology in other RID programs such as the National Testing System,

the Certification Maintenance and Continuing Education programs, and

legislative activities.

1 Cynthia B. Roy, Training Interpreters—Past, Present, and Future, in

C. Roy (ed.), INNOVATIVE PRACTICES FOR TEACHING SIGN LANGUAGE INTERPRETERS

at 10 (2000). Much of the discussion in this article is relevant not only to

interpreters working with the Deaf Community, but to interpreters working in

any multilingual or cross-cultural environment. This article, however, focuses

on American Sign Language (ASL)/English interpreters.

2 See David Allen Larson, Technology Mediated Dispute Resolution

(TMDR): A New Paradigm for ADR, 21 OHIO ST. J. ON DISP. RESOL. 629

(2006); see infra note 30 and accompanying text. Technology Mediated

Dispute Resolution (TMDR) is a term that Professor David Allen Larson

began using in an article published in 2006, Larson asserts that the more

commonly used terminology Online Dispute Resolution (ODR) is not

sufficiently inclusive and fails to acknowledge the potential of other

communication technologies such as cellular telephones, radio frequency

devices, and satellite communication systems.

3 See http://www.rid.org/UserFiles/File/pdfs/codeofethics.pdf for the

complete NAD-RID Code of Professional Conduct. A joint task force of the

Registry of Interpreters of the Deaf (RID) and the National Association of

the Deaf (NAD) developed this most recent code of professional conduct for

professional interpreters.

4 See http://www.rid.org/ethics/enforcement_procedures/index.cfm/

AID/67 for the flowchart explaining the course for processing a complaint

filed with the RID Ethical Practices System.

5 David A. Larson, Technology Mediated Dispute Resolution (TMDR):

Opportunities and Dangers, 38, U. TOL. L. REV. 213, 213-14 (2006).

6 See ROY, supra note 1, at 1–14.

7 Dennis Cokely, Interpreting Culturally Rich Realities: Research Implica-

tions for Successful Interpretations, RID J. OF INTERPRETATION, 1, 4 (2001).

8 Charlotte Baker-Shenk & Dennis Cokely, AMERICAN SIGN LANGUAGE:

A TEACHER’S RESOURCE TEXT ON GRAMMAR AND CULTURE 65 (1980).

9 Dennis Cokely, Exploring Ethics: A Case for Revising the Code of

Ethics, RID J. OF INTERPRETATION, 25, 27 (2000).

10 See generally http://www.rid.org/UserFiles/File/pdfs/EPS_Manual.pdf

for the RID ETHICAL PRACTICES SYSTEM POLICY MANUAL. (2006) (last viewed

August 15, 2007) [hereinafter RID EPS Manual].

11 Id. at 1.

12 Id. at 2.

13 Id.

14 Three motions guided the development and integration of mediation into

the EPS. Conference motion C93.07 (1993) reads: “RID establish an ad hoc

committee to 1) investigate Ethical Review Mediation Processes, 2) select

those that are sensitive to the cultures and commu nities repre sented in our

society for potential adoption, and 3) assist RID in educat ing its members

and consum ers on the use of this Media tion Process.” Board motion

96.97 (1996) reads: “[T]o accept Ethical Practices Oversight Committee

recommendation #EPO 96.06, to authorize the Association Administrator to

pursue funding sources to develop and provide mediation training.” Board

motion 99.56 (1999) reads: “[T]o accept the Ethical Practices Oversight

Committee’s listing of roles, responsibilities, members qualification and

committee goals. Role: Uphold the integrity of ethical standards among

interpreters. Provide technical assistance to the RID Board of Directors as a

triad member. Responsibilities: [E]stablish and update the Ethical Practices

System Guidelines. Implement the Mediation component of the Ethical

Practices System. Oversee the operations of the Ethical Practices System.

Provide or coordinate training for the Ethical Practices System. Enhance

public awareness of the Ethical Practices System. Serve as liaison for the

Ethical Practices Committees. Regularly review and evaluate the Ethical

Practices System. Committee member qualifications: [W]orking knowledge

of the Code of Ethics. Working knowledge of the interpreting process.

Understanding of the grievance process. Understanding of the benefits of

mediation. Time commitment: up to two face-to-face meetings per year.

Two or more two-hour conference calls. National conference attendance.

Ongoing Ethical Practices System training. Access to e-mail and/or fax.

Commitment to remain active until mediation is up and running. Other

committee goals: [M]ore cultural diversity. Ethical Practices brochure.

Increased Deaf membership on committees. National Office staff person for

Ethical Practices System. Ethical Practices materials in alternate formats.”

E-mail from Cheryl Moose, RID President (March 4, 2008) (copy on file

with author).

15 Stephanie Criner, Executive Summary, Evaluation project RID’s Pilot

Mediation Program. Unpublished Manuscript at 6, (2004) (copy on file with

author).

16 See ETHAN KATSH & JANET RIFKIN, ONLINE DISPUTE RESOLUTION: RESOLVING

CONFLICTS IN CYBERSPACE at 23–24 (2001); Susan Summers Raines, Can

Online Mediation be Transformative? Tales from the Front, 22 CONFLICT

RESOL. Q. 437, 437 (2005); David A. Larson, Technology Mediated Dispute

Resolution (TMDR): Opportunities and Dangers, 38 U. TOL. L. REV. 213,

213-26 (2006); LUCILLE M. PONTE & THOMAS D. CAVENAGH, CYBERJUSTICE

ONLINE DISPUTE RESOLUTION (ODR) FOR E-COMMERCE at 26–27 (2004); COLIN

RULE, ONLINE DISPUTE RESOLUTION FOR BUSINESS at 61 (2002).

17 E-mail from Matthew O’Hara, RID Director of Finance and Administra-

tion (June 22, 2007) (on file with author).

18 RID EPS Manual, supra note 10 at 5.

19 Telephone Interview with Matthew O’Hara, RID Director of Finance and

Administration (June 18, 2007).

20 Id.

21 See RID EPS Manual, supra note 10 at 6 (stating that “If the parties

decide upon a resolution, the mediators write the agreement and ask both

parties to sign. The Mediation Agreement form includes a description of the

26Health Law & Policy

agreement, the issue(s) involved in the complaint, and the resolution agreed

to by the parties. The resolution should include the points the parties agree

on; specific action to be taken by either or both parties; expected completion

dates and submission of proof, if required; and terms of compliance.”) RID

EPS Manual, supra note 10 at 7 (noting that “RID will keep a copy of the

signed Mediation Agreement”.)

22 Id. (noting that “The RID EPS Coordinator or designee will monitor

whether the terms of the Mediation Agreement are satisfactorily completed.

Individuals should supply proof that they have met all of the requirements by

the completion date.”).

23 Id. (stating that “when all actions are completed, the case is considered

closed.”).

24 Id. (explaining that “RID must receive a copy of the signed Mediation

Non-agreement form. The case remains open and is referred to the next step

in the EPS, the adjudication process, for review of the original complaint.

The circumstances and the results of the mediation attempt are neither

provided nor considered in adjudication.”).

25 Id. at 8 (explaining that “adjudication is a peer review process in which

a selected panel of interpreters evaluates evidence of an alleged violation

and determines whether a professional action was in violation of the NAD-

RID Code of Professional Conduct. If it is determined that a violation did

occur, the panel is further empowered to determine what sanctions should be

imposed. A complaint and all supporting documentation are sent to a selected

panel of three EPS adjudicators (members of EPS) who review, confer, and

make a decision.”)

26 Id. at 10.

27 For examples of virtual juries, see iCourthouse, http://www.i-courthouse.

com (last visited March 16, 2008) and Virtualjury, http://virtualjury.com (last

visited March 16, 2008). See also Symposium on Enhancing Worldwide

Understanding Through Online Dispute Resolution, 38 U. TOL. L. REV. 1 –

435 (2006) (for a discussion of the many different types of dispute processes

that can be offered online ranging from cyberjuries to online mediation,

negotiation, and arbitration).

28 See PONTE & CAVENAGH, supra note 16 at 18.

29 Supra note 2 at 634.

30 See Larson, supra note 5 at 213.

31 Any modifications must be transparent. The parties must be able

to distinguish the original message from a subsequent modification or

supplementation.

32 See http://markey.house.gov/docs/telecomm/draft_of_telecom_

legislation.pdf.

33 See Summary of the “21st Century Communications and Video

Accessibility Act.” Coalition of Organizations for Accessible Technology

(COAT), available at http://www.coataccess.org/node/32 (last visited

February 4, 2009).

34 Amanda Lenhart, Data Memo: Cyberbullying and Online Teens, Pew

Internet and American Life Project, 1, June 27, 2007, available at http://

www.pewinternet.org/pdfs/PIP%20Cyberbullying%20Memo.pdf (last visited

March 11, 2008.)

35 Id.

36 Id. at 4-8.

37 KATSH & RIFKIN, supra note 16 at 73.

38 Id. at 78.

39 Id. at 83.

40 Id. at 89-90.

41 Id. at 74–75.

42 Id.

43 See Assistive Equipment and Technology fact sheet published by the

Minnesota Department of Human Services, Deaf and Hard of Hearing

Services Division at http://www.dhs.state.mn.us/main/idcplg?IdcService=

GET_DYNAMIC_CONVERSION&RevisionSelectionMethod=Latest

Released&dDocName=id_003399 (last viewed February 7, 2009).

44 Supra note 8 at 246.

45 Id. at 246 (noting “[T]here are certain rules that people generally follow

when using a TTY...: always identify yourself (“PAT JONES HERE” or “

THIS IS PAT JONES”) since you generally cannot tell who a person is by

how s/he types; when you want the other person to respond, type GA (“THIS

IS PAT JONES GA) so that the other person knows it is his/her turn to Go

Ahead; when you are done with your conversation, type SK or GA (:SEE

YOU TOMORROW SK or GA”) so the person can decide to stop (SK =

“STOP KEY” or continue to respond “GA); conversations are ended by

typing SKSK.”).

46 See Virginia W. Stern & Martha Ross Redden, Technology and

Handicapped People, BACKGROUND PAPER #2: SELECTED TELECOMMUNICATIONS

DEVICES FOR HEARING-IMPAIRED PERSONS (December, 1982) at 9, available

at http://govinfo.library.unt.edu/ota/Ota_4/DATA/1982/8225.PDF (last

viewed February 7, 2009). Despite the antiquated terms used to describe

Deaf people, this paper offers an excellent overview of the history and

development of TTYs and the subsequent legislation that governed billing

for long distance phone usage with TTYs. The Connecticut Public Utilities

Control Authority issued an order in 1977 (docket No. 77-0250, December

16, 1977) allowing a 75 percent reduction in the phone bills of Deaf TTY

users for intrastate long-distance calls. Likewise, reductions were initiated in

42 other states during the next four years.

47 Id. at 9-10.

48 See LARSON, supra note 29 at 633.

49 See TTY GUIDE from the Minnesota Department of Human Services,

Deaf and Hard of Hearing Services Division available at http://www.dhs.

state.mn.us/main/idcplg?IdcService=GET_DYNAMIC_CONVERSION&

RevisionSelectionMethod=LatestReleased&dDocName=id_004574 (last

viewed February 7, 2009).

50 See Puneet Gupta, Short Message Service: What, How, and Where,

WIRELESS DEVELOPER NETWORK (Mindsites Group, LLC 2008) available at

http://www.wirelessdevnet.com/channels/sms/features/sms.html (last visited

February 7, 2009).

51 Andrea M. Braeutigam, What I Hear You Writing Is . . . Issues in ODR:

Building Trust and Rapport in the Text-Based Environment, 38 U. TOL. L.

REV. 101, 116 (2006).

52 Id. at 122. Although Braeutigam’s suggestions and insights are valuable,

one should be careful about using sensory words indiscriminately.

53 Americans With Disabilities Act, 47 U.S.C. § 225. (1990).

54 See http://www.fcc.gov/cgb/consumerfacts/videorelay.html (noting that

today, interpreters working in VRS Centers are generally referred to “Video

Interpreters” or VIs). (last viewed February 7, 2009).

55 Press Release, National Association of the Deaf, NAD President

Scoggins Emcees VRS Demo on Capitol Hill (Feb. 26, 2007), available at

http://www.nad.org/scogginsvrsdemo (last viewed February 7, 2009).

56 Id.

57 The number of VRS providers is expanding significantly. Current service

providers include: AT&T VRS – www.attvrs.com, California Association

of the Deaf VRS – www.cadvrs.com, CSDVRS – www.csdvrs.com,

Communication Access Center – www.cacvrs.org, Federal VRS – www.

fedvrs.us, Hamilton VRS – www.hamiltonrelay.com, Hands On VRS – www.

hovrs.com, Hawk VRS – www.hawkrelay.com, i711 VRS – www.i711.com,

IP – VRS – www.ip-vrs.com, Life Links VRS – www.lifelinksvrs.com, My

Relay VRS – www.myrelay.com, Nextalk VRS – www.nextalk.net, Snap

VRS – www.snapvrs.com, SPRINT VRS – www.sprintvrs.com, Sorenson

VRS – www.sorensonvrs.com, Viable VRS – www.viable.net/vrs.

58 See e.g. http://www.youtube.com/results?search_query=ASL.

59 See e.g. http://www.joeybaer.com/.

60 See Blog, Wikipedia, available at http://en.wikipedia.org/wiki/Blog

(last visited March 28, 2009). Blogs are text-based websites that provide

commentary on a wide variety of political to intensely personal issues

typically arranged in reverse chronological order. The word blog is a

portmanteau of web log;

61 See supra note 57.

62 Americans With Disabilities Act, 47 U.S.C. § 225 (1990). Telecom muni-

cations relay services, which are mandated in Title IV, the Telecommuni-

cations Title of the American’s with Disabilities Act include the provision of

video relay services. FCC Consumer Facts, available at http://www.fcc.gov/

cgb/consumerfacts/videorelay.html (last viewed February 7, 2009).

63 LARSON, supra note 5 at 218, (quoting Lee Rainie from the Public Library

Association’s annual conference in March 2006).

64 See Jones, infra note 66. Yahoo! Groups is a service offered by Yahoo

that allows individuals with shared interests to meet in cyberspace and share

messages, file, photos and calendars, http://groups.yahoo.com/ (last visited

March 16, 2008).

65 See http://rid.org/.

27Spring 2009

66 Angela Jones, What’s Technology Got to do With it?, 24 RID VIEWS 4–5

(June, 2007).

67 Id. at 4.

68 Julie C. Weisenberg & Emmanuel Garcia, From Telephone to Dial Tone:

A Look at Video Interpreting. 24 RID VIEWS 32 (June 2007). Weisenberg

and Garcia raise concern over the high demand for interpreters in video

relay settings by identifying similarities between the experience of artisans

during the industrial revolution and interpreters today, drawn to working

in video relay centers. “In the world’s industrial revolutions, the ones who

suffered the most were the artisans, those who were literally crafting and

manufacturing products by hand. Then we moved to mechanization in

which factories could increase manufacturing rates by using cheap labor.

When the artisans were driven out, they became factory workers and fell

into routinization and unimaginative assembly line work. We can draw

parallels to video interpreting. We have interpreters, who possess a talent

for mediating communication and who have traditionally worked in face-

to-face situations, moving from the community to machine-based work.

Interpreters facilitate calls following specific routines based on the software

and equipment for specified periods of time.”

69 KATSH & RIFKIN, supra note 16 at 74.

70 Supra note 54.

71 CSDVRS Help Documents and Videos, http://csdvrs.com/support/faq.

aspx (last visited February 7, 2009).

72 Id.

73 Id.

74 Id.

75 Id.

76 Sorenson VRS Products, http://www.sorenson.com/products/ (last visited

April 9, 2009).

77 CSDVRS Frequently Asked Questions, http://csdvrs.com/support/faq.

aspx (last visited March 4, 2008).

78 E-mail from John Lange, College of St. Catherine Media Manager

(August 13, 2007) (on file with author).

79 Id.

80 Id.

81 Id.

82 Programs within the College of St. Catherine have used the Tandberg

3000 MXP Video Conferencing System in a variety of ways. Both the ASL

& Interpreting Department and the CATIE Center have conducted meetings

and seminars using this system with Deaf and non-Deaf participants using

ASL. The Master of Library and Information Science (MLIS) conducts

distance courses for their non-Deaf students in conjunction with Dominican

University in River Forest, Illinois.

83 E-mail from Jan Florand, CSD MN Director of Interpreting Operations

(August 13, 2007) (on file with author).

84 See http://m2l.market2lead.com/go/polycom/pvx_trial_sw (Accessed

February 7, 2009).

85 See supra note 10 at 2.

86 Id.

87 Id.

88 Id.

89 Id.

90 RID EPS Manual, supra note 10 at 3.

91 Id.

92 First class mail at the Hamline University School of Law, for example,

is not delivered to the faculty until after 3:00 p.m. Monday through Friday

and the mail is not delivered at all on the weekends. In contrast to this “snail

mail” system, e-mail is delivered instantly seven days a week and twenty-

four hours a day. Although there can be an occasional lapse in an e-mail

system, those delays are addressed quickly and the digital messages then

are delivered. The authors suspect that it is unlikely that the percentage of

lost e-mail messages exceeds the percentage of paper letters that are “lost in

the mail.” But more importantly, it would be extraordinarily unlikely that a

Complainant’s hard copy written notice would be lost or not delivered by the

United States Postal Service and that same notice also would be lost or not

delivered by an e-mail server. If the goal is to ensure that the Complainant

not only receives the notice but does so in a timely manner, then the notice

also should be dispatched via e-mail.

93 Video messages can be sent easily and inexpensively. Videos can be

created with a simple web camera and sent to the other party or parties as

a video mail attachment. Using this method of communication, at least for

some individuals, may be faster and more efficient than typing a message.

Every communication does not need to be in a video format. But video might

be helpful when a particularly complex or potentially confusing message

needs to be communicated.

94 Supra note 10 at 5.

95 See KIMBERLEE K. KOVACH, MEDIATION: PRINCIPLES AND PRACTICE (West,

a Thomson Business 3rd ed.) 160-162 (2004); CARRIE MENKEL-MEADOW,

LELA PORTER LOVE, ANDREA KUPFER SCHNEIDER, MEDIATION: PRACTICE, POLICY,

ETHICS, 224 (Aspen Publishers, 2006).

96 See http://secondlife.com/whatis/avatar.php. (Accessed February 8,

2009). A now familiar example of a virtual environment populated by

avatars is Second Life, which describes itself as “an online, 3D virtual world

imagined and created entirely by its Residents.”

97 “Vcom3D and the Laurent Clerc National Deaf Education Center of

Gallaudet University are researching and developing a proof-of-concept

system for creating and delivering animated stories using the full range of

facial expression and body language of American Sign Language, as well

as manual signs. Results from this Phase I proof-of-concept will provide

the basis for developing an authoring system and run-time software for

creating these animated stories. For this research, we will evaluate how the

use of newly developed “Lifelike Expressive Avatars” affects the reading

comprehension of Deaf and hard of hearing students. The evaluation tool

includes the following story, titled “The Forest”, which was written by Jason

Stewart, teacher at Kendall Demonstration Elementary School,” http://www.

vcom3d.com/vault_files/forest_asl/. (Accessed February 8, 2009).

98 See Rovion Moving Media, http://www.rovion.com/index.asp.

99 See http://www.viditalk.com/site/.

100 See supra note 10 at 6.

101 Id.

102 See, e.g., http://www.aligncorp.com/images/Align_Negotiation_

PrepSheet.pdf;http://tutorials.freeskills.com/negotiation-stage-1-

preparation.htm http://ezinearticles.com/?Six-Steps-For-Negotiation-

Preparation&id=413338; http://groupmindexpress.com (Accessed February

8, 2009).

103 See supra note 10 at 15.

104 Id. at 7.

105 Id.

106 Id.

107 See RID EPS Manual, supra note 10 at 9.

108 Id.

109 Id.

110 Id.

111 Id. at 5.

112 See supra note 96.

113 See There.com, available at http://www.there.com/ (last visited March

28, 2009).

114 See Arno R. Lodder, Second Life and Other Three Dimensional

Visual Worlds: Next Phase for Online Dispute Resolution? Proceedings

of 4th International Workshop on October 5–6, San Jose, USA (2007),

available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1014845#

PaperDownload (last visited February 8, 2009) (discussing the potential for

dispute resolution in a virtual three-dimensional environment).

115 Eve Tahmincioglu, The Faculty Is Remote, But Not Detached, N.Y.

TIMES, Jobs 15, March 9, 2008, available at http://www.nytimes.com/2008/

03/09/jobs/09starts.html?_r=1&scp=1&sq=Tahmincioglu&st=nyt&oref=

slogin (last visited February 8, 2009) (noting that online courses of all

types increasingly are being offered by colleges and universities. Almost

3.5 million students enrolled in online courses in the fall of 2006 and more

than two-thirds of all higher education institutions have some type of online

offering. Some universities have a truly significant presence online. The

University of Phoenix, for example, reports that it has approximately 12,500

online faculty members [primarily part-time]).

116 See http://www.vimeo.com/ Similar to YouTube and Google Video,

Vimeo allows users to upload, store, and share video. Vimeo distinguishes

itself as “the first site to enable High Definition (HD) video sharing.” http://

www.vimeo.com/press (last visited February 8, 2009).

28Health Law & Policy

Profiling may offer

promise as a way

to rid the health

care system of

inefficiency—

believed by many

experts to constitute

up to 30% of

expenditures.8

Adoption of these

techniques by

Medicare, however,

will likely provoke

conflicts and

difficult choices.

I. IntroductionEach year, America’s rapidly rising health care

costs become the focus of congressional attention as

physicians seek relief from Medicare reimbursement

cuts. Such cuts are typically mandated by the

Sustainable Growth Rate (SGR) formula, intended

to hold physician expenditures to a target amount

tied to Gross Domestic Product (GDP).1 Physician

expenditures continue to grow excessively relative to

GDP,2 and policymakers are struggling to find a way

to contain these costs.

One tool that might be employed is “physician

profiling,” that is, comparing physicians to each other

and using the results in different incentive programs.

Health plans and other payors are using episode-

grouper software to measure physicians’ resource

use as one way to profile physicians.3 Typically, the

software groups file claims for services related to a

patient’s diagnosis, including services provided by

the physician, tests and diagnostic work, services

provided by specialists, and inpatient and outpatient

procedures.4 The software’s programming logic then

attributes the resources to a single physician, defines

the beginning and end of the episode, and separates

out services related to other conditions that the patient

may have.5 The resulting product is a profile that

compares the efficiency (and sometimes the quality) of

care delivered by different physicians to patients with

similar conditions.6

Policymakers have discussed possible uses for

this information. The least aggressive use of this

information is for confidential reporting. Some hope

that if physicians become aware of how they compare

to others, they will modify their practice pattern.7

More intrusive uses include public disclosure as a basis

for pay-for-performance bonuses or penalties, to place

low-resource-use physicians on preferred tiers, and

exclude high-resource-use physicians from a network

altogether.

Profiling may offer promise as a way to rid the health

care system of inefficiency—believed by many experts

to constitute up to 30% of expenditures.8 Adoption

of these techniques by Medicare, however, will likely

provoke conflicts and difficult choices.

This article will discuss the research findings about

variations in physician resource use and how private

plans have used claims data to distinguish between

efficient and inefficient physicians. It will note some

of the conflicts that have arisen from, and challenges

involved in, measuring individual doctors’ efficiency.

Next, the article addresses policy options for Medicare

to improve physician efficiency. Finally, it discusses

the difference between individual accountability

and shared accountability approaches to evaluating

physician performance.

II. BackgroundThe rationale for pursuing accountability-based

approaches to paying physicians is well stated by the

Institute of Medicine (IOM) in the introduction to its

report on pay-for-performance, Rewarding Provider

Performance: Realigning Incentives in Medicare:

The current Medicare fee-for-service payment

system is unlikely to promote quality

improvement because it tends to reward

excessive use of services; high-cost, complex

procedures; and lower-quality care. Through

bundled and prospective payment arrangements

for institutions, Medicare has attempted to

create incentives for efficiencies, but significant

price and payment distortions persist.9

The National Quality Forum (NQF) has summarized

what is at stake:

Waste in the healthcare system has a negative

impact on individual patients and populations.

All encounters with the health system expose

patients to some degree of risk, and the

provision of unnecessary services to patients

exposes them to more potential harm than

good, not to mention inconvenience and often

monetary costs. The provision of unnecessary

* Jackson Williams is the Director of Government

Relations at the National Certification Board for

Therapeutic Massage and Bodywork. Previously, Mr.

Williams was the Senior Policy Advisor on Health at

the American Association of Retired Persons (AARP)

Public Policy Institute. He received his Bachelor of

Arts degree at the University of Illinois, his Juris

Doctor at Loyola University of Chicago, and his

Master’s in Public Administration at Governors State

University. Mr. Williams thanks Joyce Dubow, Sarah

Thomas, and Greg Pawlson for providing helpful

comments on earlier drafts.

PHYSICIAN PROFILING: POLICY OPTIONS TO

IMPROVE EFFICIENCY IN MEDICARE

Jackson Williams*

29Spring 2009

services to patients also consumes resources

that could have been used to benefit others in

the population (i.e., the uninsured).10

It is important to note at the outset that no one expects

that efforts to make Medicare more efficient will occur

in isolation from efforts to measure and improve

clinical quality. Indeed, efficiency is considered one

of the six “domains” of quality as defined by the IOM

in its seminal report, Crossing the Quality Chasm.11

Technically, efficiency encompasses quality, as it

implies a relationship between benefit and cost.12

However, this article uses the term “efficiency” in the

sense of curbing excess resource use, as distinguished

from “clinical quality.”

Experience in the private sector, as well as studies of

Medicare claims, indicate that there is considerable

variation in the resources different physicians use to

treat similar patients.13 Private insurance plans have

used physician profiling to spur less efficient doctors

to emulate their more efficient peers.14 Policy analysts

inside and outside of government urge Medicare to try

to alter the behavior of inefficient physicians. As the

Medicare Payment Advisory Commission (MedPAC)

has argued:

[T]he nation could spend less on health care,

without sacrificing quality, if physicians whose

practice styles are more resource-intensive

reduced the intensity of their practice—that is,

if they provided fewer diagnostic services, used

fewer subspecialists, used hospitals and intensive

care units as sites of care less frequently, and

performed fewer minor procedures.15

What is referred to here as the individual accountability

approach is heavily influenced by the experience

of private health plans with pay-for-performance

programs and selective contracting in PPOs.16 The

individual provider is the unit for which performance

is analyzed (since the provider could be a group

of physicians, the term “individual” is a shorthand

expression here). Examples of measures that use

providers as the unit of analysis are Medicare’s

Hospital Compare and Physician Quality Reporting

Initiative (PQRI) process measures.17 It is important

to note that the rated physicians may be held responsible

for services they may not have furnished or, indeed, for

services over which they had little influence.18

As the IOM report noted, “efficiency measures are

still largely under development.”19 The following

discussion clearly indicates that pitfalls await those

attempting to implement use of such measurements

for individual doctors. Medicare is taking a first, small

step in this direction, but several commentators have

suggested that further steps should be taken, following

the trail blazed by private insurers.

III. Variation in Physicians’

Resource UseA number of studies that use physician practices as

the unit of analysis find wide variation in resource

use intensity for similar patients, and suggest that the

Medicare program would save a substantial amount of

money if more doctors adopted the practice styles of

those at the high end of the efficiency distribution.

Jonathan Weiner examined three sets of physician claim

data to derive risk-adjusted efficiency comparisons,

finding that:

[The] difference in the case-adjusted efficiency

between the 30% of physicians that represent

the most efficient cohort, and the 30% that are

the least efficient, was consistently at least .8 vs.

1.2 of average (average is set at 1.0) for all three

databases. This means

that the patients of the

most ‘efficient’ group of

providers (after case-mix

was taken into account)

used on average 20% less

services than expected

while the patients of the

least efficient cohort of

physicians used services

that were 20% more than

expected.20

MedPAC explored varia-

tions in physician resource

use utilizing episode-grouper software supplied by

commercial vendors.21 This software allows com-

parisons of the average resource use of physicians for

similar episodes involving similar patients. MedPAC

studied variation among several physician specialties

and found that for ophthalmologists, dermatologists,

internists, cardiologists and allergists, resource use per

episode varied twofold or more between physicians in

the highest and lowest deciles of intensity.22

The Government Accountability Office (GAO) identi-

fied “outlier” physicians as generalists who saw a

disproportionate share of beneficiaries who accrued

medical bills that were unusually high, considering

their health status.23 After taking health status and

location into account, GAO found that:

Medicare patients who saw an outlier

generalist—compared with those who saw other

generalists—were 15 percent more likely to

30Health Law & Policy

have been hospitalized, 57 percent more likely

to have been hospitalized multiple times, and 51

percent more likely to have used home health

services. By contrast, they were 10 percent less

likely to have been admitted to a skilled nursing

facility. We concluded that outlier generalists

were likely to practice medicine inefficiently.24

IV. Private Plan ActivityA recent report from the Center for Studying Health

System Change (HSC) described how private insurers

have responded to variations in physician efficiency

by identifying “high-performance networks that

encourage enrollees to choose network physicians who

score well on measures of efficiency and quality.”25

These insurers have used the episode-grouper software

to determine whether physicians complied with

recommended processes during a treatment episode,

as well as the total cost of an episode.26

HSC reported that:

High-performance networks typically are

not distinct products, but rather an option for

use across different product platforms, most

commonly preferred provider organizations

(PPOs).

The exact specifications of high-performance

networks differ across plans. The most

common model uses tiered-provider levels,

with corresponding enrollee cost-sharing

differentials. The first tier consists of the high-

performing providers; the second tier consists

of the remainder of in-network providers;

and the third tier consists of out-of-network

providers. Employers often do not differentiate

cost sharing between the first and second tiers,

offering these networks only as a source of

information to their employees about which

providers have better performance.27

HSC noted, however, that at least one health plan

cut the lowest performing “outlier” physicians

from its network altogether, and that another would

consider taking this step as well for physicians who

fail to change their ways even after receiving specific

information on how to improve.28 Conversely, one

prominent insurer, United Healthcare, is paying

additional reimbursements to physicians in its top tier.

Based on the private plan experiences, HSC identified

several barriers to the operation of tiered networks

as follows. First, a perceived lack of legitimacy of

efficiency measures is apparent when different data

sets, different ranking systems, or different cutpoints

result in the same physician being designated as

superior by one insurer but not by another, or being

designated superior one year but not the next.

Variation in scores can be explained by different prices

negotiated with different purchasers, yet physician

perception of inequities has resulted in pushback.29

Employers’ reluctance to take the heat for the stern

measures needed to enforce a tiered network (i.e.,

telling enrollees they must pay more to see particular

physicians, especially when doing so may disadvantage

enrollees in particular locations).30 There was a lack of

evidence that tiered networks lower health care costs or

inducing widespread change in physician behavior.31

While the rollout of individual measures has been

rocky, resistance could be expected in an early-adoption

phase during which there is a lack of standard measures

or benchmarks, disparate insurers analyzing different

data, and some clumsiness on the part of insurers in

introducing the programs to doctors. Presumably,

some of these deficiencies can be overcome by the

time that Medicare adopts efficiency measures. On

the other hand, as will be discussed below, several real

obstacles will provide challenges.

V. Policy Options for MedicareImplementation of any policies based on physician

profiling is complicated first by questions about whether

episode-grouper techniques are sufficiently refined

to effectively measure physician resource use.32 Cer-

tainly, none have undergone the sort of scrutiny that

has been afforded to quality and patient experience

measures promulgated by quality promotion

organizations such as the NQF or National Council for

Quality Assurance. Issues related to accuracy, validity,

and risk-adjustment pose unanswered questions.

A. Accuracy issues.

Accuracy issues would include the inability to attribute

patients to the appropriate doctor when multiple

doctors see the patient, incomplete clinical information

in claims data, or an insufficient number of episodes

involving a specific condition from which to calculate

reliable measures.33

B. Validity issues.

Validity issues relate to what constitutes the “correct”

intensity of resource use for a given episode. In the

absence of evidence as to best practices, benchmarks

may be based instead on convenience, such as averages

or arbitrary percentiles. Validity, or the perception of

validity, can also be hindered by a lack of stakeholder

consensus and the opacity of proprietary software

programs.

Reporting of

efficiency measures

may be a double-

edged sword—

skeptical consumers,

left cynical in the

wake of perceived

managed-care

excesses, could

view an “efficient”

physician as one

who skimps on care,

and see physicians

with more intense

resource use as those

who are willing

to go the extra mile

for their patients.

31Spring 2009

C. Risk adjustment issues.

Measures that do not properly account for the severity of a patient’s illness

would not only be inaccurate but could also discourage physicians from

treating the sickest patients. A separate but similar issue arises from patient

behavior that doctors cannot control, such as patients’ failure to adhere to

treatment plans or healthy lifestyles, inability to afford prescription drugs,

or demands for specific expensive services.34

Policymakers hoping to spur greater efficiency among physicians delivering

care to Medicare patients can choose from a menu of policy options. The

options span a continuum that ranges from voluntary and collaborative

quality improvement efforts to increasingly rigorous approaches.

VI. FeedbackThe mildest policy option is for the Centers for Medicare and Medicaid

Services (CMS) to provide confidential feedback to physicians about

how their resource use compares with that of peers. The rationale for this

option is physician professionalism. As MedPAC observed, “[m]any

physicians are highly motivated individuals who have continually strived

for high grades and peer approval. If identified as having an unusually

resource-intensive style of practice, some physicians may respond by

reducing the intensity of their practice.”35 In fact, CMS is already preparing

a demonstration project that will use the episode-grouper software to

provide feedback to physicians on selected illnesses.36

MedPAC also observed:

Evidence on measuring the effectiveness of resource use in containing

private sector costs is mixed and varies depending on how the results

are used. Providing feedback on use patterns to physicians alone has

been shown to have a statistically significant, but small, downward

effect on resource use, but, when paired with additional incentives,

the effect on physician behavior can be considerably larger.37

MedPAC may be overly optimistic in assuming that providing feedback

on resource use with an appeal to doctors’ professionalism would have

the positive effect that it has in the clinical quality context. First, physi-

cians may disregard feedback viewed as lacking validity and reliability.

Second, the appeal of feedback to a doctor’s professionalism would have

to overcome a very compelling countervailing force: the fee-for-service

system’s incentive to provide more care. The “target income hypothesis”

holds that physicians maintain a volume and intensity of practice sufficient

to achieve their preferred balance of profit and leisure.38

It may be that the “inefficient” or “outlier” physician is busy, a bit

disorganized, and simply has a cavalier attitude toward the use of resources;

this physician might be interested in learning about her peers’ best practices.

On the other hand, she may have a relatively small patient load and “induce

demand” for frequent evaluation and management visits or referrals to her

own ancillary services, such as imaging, to maintain her standard of living.

To be efficient, this physician might have to advertise or take emergency

room duty to build a larger patient base, or relocate from an area saturated

by a high concentration of physicians to a rural community. The physician

may be forced to forgo income necessary to amortize an investment in

equipment.

VII. Public ReportingFurther along the incentive continuum is the concept of public reporting

of physician efficiency. Efficiency reporting could come to pass by two

possible avenues. First, Medicare could take the lead in tabulating and

releasing efficiency measures. This approach is embodied in S. 1544,

legislation co-sponsored by Senator Judd Gregg (R-NH) and former

Senator Hillary Clinton (D-NY) in the 110th Congress.39 This bill would

authorize the creation of Medicare Quality Reporting Organizations which,

under contracts with the Department of Health and Human Services (HHS),

would publicly release quality and efficiency reports based on Medicare

data.40

Second, other entities, such as states, public interest groups, or commercial

vendors could use Medicare claims data to tabulate and disseminate the

information. Consumer advocates had hoped that the claims data needed

to measure individual physicians’ resource use would be available to the

public through the Freedom of Information Act, but a recent court decision

has cast doubt on that possibility.41 It is not clear whether public reporting

could begin to move forward without any further legislative or executive

action.

“Transparency” has been the focus of several major health care initiatives in

recent years, including those of the recent Bush Administration. Measuring

and reporting price information was one of the four cornerstones of that

administration’s Value-Driven Health Care initiative. HHS has already

begun posting the prices of various discrete procedures, but has

acknowledged that “measur[ing] the overall cost of services for common

episodes of care and the treatment of common chronic diseases” is a

necessary second step in achieving cost transparency.42

A prominent private-sector effort is the Consumer-Purchaser Disclosure

Project, which advocates public reporting of efficiency measures as a

“path to significant savings in health care.”43 Citing the Weiner research

referenced above and other similar research, it contends that “Medicare

and other purchasers could save from 2% to 4% of total costs if only one

out of ten beneficiaries were to move from less efficient to more efficient

physicians.”44 The group has also called for HHS to release Medicare

physician billing data to private insurers to enable better comparisons of

provider efficiency.

Reporting of efficiency measures may be a double-edged sword—skeptical

consumers, left cynical in the wake of perceived managed-care excesses,

could view an “efficient” physician as one who skimps on care, and see

physicians with more intense resource use as those who are willing to go

the extra mile for their patients. For reporting of efficiency measures to

have the intended effect, the public must feel assured that “inefficiency”

means additional care that provides no marginal benefit.

Progress toward public reporting of efficiency measures is hindered by the

concerns over the accuracy, validity, and risk adjustment issues outlined

above. These concerns are magnified in the public reporting context

because, with reputations and patient relationships at stake, physicians have

not hesitated to litigate disputes over these issues. At present, doctors in

Connecticut are in court challenging two insurers’ designations of superior

practitioners as “a fraud upon the public and a libel against the plaintiff

physicians” who were not so designated.45 Doctors in New York State

32Health Law & Policy

persuaded the State Attorney General to threaten lawsuits against three

insurers planning similar programs,46 although that dispute has been settled

as described below.

Judicial precedents relating to bond-rating agencies suggest that public

reporting of physician efficiency ratings would be protected by the

First Amendment, even if a court agreed that the ratings were useless

to consumers.47 However, threats of litigation could discourage private

entities from taking on this already intimidating task. It is clear that all

stakeholders would be better off if a consensus could be reached in advance

regarding ways in which to develop resource measures that are accurate,

scientifically valid, and do not create perverse incentives for doctors to

avoid the sickest patients.

Efforts toward such consensus measures are under way. In early 2007,

the Integrated Healthcare Association, a California consortium that pioneered

pay-for-performance programs, announced that it would develop efficiency

measures to pair with its previously established quality criteria.48 Later the

same year, the Robert Wood Johnson Foundation (RWJF) committed $16

million in grants to build a multiple-payor database to measure and report

on physician performance. RWJF said that the project, to be overseen by

the Quality Alliance Steering Committee, would:

[Work] in collaboration with the NQF endorse ment process to

identify measures of cost for 20 common conditions, resulting in

a new set of measures that take into account appropriate use of

resources and provide a broader picture of quality of care for these

conditions.49

Finally, negotiations spurred by the New York State dispute resulted in a

multi-stakeholder agreement announced April 1, 2008, which will permit

insurer-sponsored performance measurement programs to go forward,

subject to review by a “nationally-recognized, independent health

care quality standard-setting organization.”50 This “Patient Charter”

contemplates scrutiny of heretofore “black box” ranking mechanisms and

the eventual development of standards for resource use measurement that

will have comparable legitimacy to currently accepted quality measures.

However, at least one additional lawsuit has been filed by physicians

subsequent to the agreement.51

VIII. Tiered NetworksA further step toward applying pressure on physicians would be for

Medicare to adopt the tiered network approach that some private plans

have taken. In a January 1998 report, the National Academy of Social

Insurance’s (NASI) Study Panel on Fee-For-Service (FFS) Medicare

recommended that Medicare experiment with “best practices of private

health plans,” including “PPOs, perhaps in which beneficiaries face lower

Medicare premiums in exchange for a designated PPO physician.”52 The

panel observed that, “[w]ith its large market share and significant data

resources, FFS Medicare is in a relatively good position to identify and

select preferred providers on the basis of quality or costs.”53

Eighteen months later, NASI’s recommendation was echoed in a Clinton

administration white paper on modernizing Medicare. That paper proposed

creating a “Medicare Preferred Provider Option,” to be administered

by “existing organizations with PPOs.” To create the PPO network,

“practitioners’ and providers’ claims history and quality information

would be assessed. Only those applicants with a demonstrated history of

cost-effective medical practice patterns would be selected as preferred

providers.”54 Under the Clinton proposal, beneficiaries choosing the PPO

option would have lower cost-sharing responsibilities.55

Both the NASI and Clinton administration papers cited the prevalence of

preferred provider networks in the private sector, but neither addressed

what long-term impact they intended a tiered network to have within FFS

Medicare. One rationale for tiering doctors is that the variation in resource

usage as a given and ask beneficiaries who choose to stay with less efficient

doctors to internalize more of the costs that their choice imposes on the

program as a whole. However, this approach assumes that patients have

made a conscious choice to stick with an inefficient doctor. One question

for Medicare in particular is whether there is sufficient access to doctors in

the preferred tier. By definition, any preferred provider network limited

to a given upper percentile of high-quality, efficient providers will have

a limited capacity to absorb patients. Thus, some beneficiaries may be

unable to access a top-tier physician because of patient load constraints, not

because of choice. For these patients, charging a higher premium or higher

co-insurance exacerbates the misfortune they are already experiencing as a

result of their inability to access an above-average physician.

Another rationale for tiering would view the preferred provider network

not as an end in itself, but as a means for influencing physician behavior.

In other words, the ultimate expected outcome would not be a two-tier

system, but rather a single tier operating at a higher level of performance,

driven by the financial threat to practitioners who do not achieve

an acceptable level of efficiency. If this could be accomplished, the

inconveniences caused by tiering would be temporary, but would still cause

burdens on beneficiaries during a turbulent imple mentation period.

IX. Payment Tied to PerformanceThe ideal endpoint of physician payment policy reforms would be an

environment in which physicians who provide care of high clinical quality

with appropriate resource use are paid more than physicians who provide

less value per unit of work. The current system of administered pricing does

not allow for differential fees for the most skilled or most efficient doctors.

In a pay-for-performance regime, some entity would assess doctors’ value

and adjust fees accordingly.

Two major pay-for-performance efforts currently underway that reward

physicians for both efficiency improvements and clinical quality are the

United Health Care (UHC) Practice Rewards program and Medicare’s

Physician Group Practice (PGP) Demonstration.

The UHC program is based on “episodic efficiency,”56 with rewards in the

form of higher pay. UHC’s episode-grouper software sorts physicians along

quality and resource use dimensions. It requires physicians first to qualify

on the basis of clinical quality as indicated by claims for the provision of

guideline-mandated care. After meeting that threshold, physicians are

then ranked on resource use.57 Imagining a grid in which physicians are

placed vertically from top to bottom on a quality axis and ranked from right

to left on an efficiency axis, physicians lying in the upper right quadrant

are eligible for enhanced fees during the year following their designation,

receiving a five percent increase to their commercial fee schedule.

33Spring 2009

As the IOM noted that another option would be to “penalize providers who

exhibit the worst performance or the least effort to improve.”58 This could

involve withholding some fraction of reimbursements from physicians

whose performance does not meet efficiency standards. As the IOM

observed, “such a system could generate considerable resistance among

providers [and] providers who were not confident of their ability to improve

might refuse to participate.”59

The Physician Group Practice Demonstration is based upon “longitudinal

efficiency,”60 with rewards in the form of shared savings. For each physi-

cian group practice (PGP), Medicare savings from the demonstration are

calculated by comparing actual spending each program year

to the PGP’s own base-year per-capita expenditures,

adjusted by a comparison group’s expenditure

growth rate.61 A bonus pool equal to 80% of

savings is created if a PGP achieves Medicare

savings of more than two percent. The PGP

is entitled to 70% of the pool automatically,

but can receive the entire pool of money

only if it meets quality targets as well.

The PGP model does not “penalize”

inefficient resource use, but the provider

risks losing any funds invested in

improving performance.

A payment methodology that is both

“gated” and based on “longitudinal

efficiency” might be the most rigorous

possible application of efficiency mea-sures

to pay-for-performance pro grams. A “gated”

approach making clinical quality a necessary

but not sufficient requirement ensures that

there can be no backsliding on quality or stinting

on care to earn a bonus. Longitudinal measures of

care can cut across settings, beyond individual episodes,

and over the longer term to promote coordination among the

different providers who serve a single patient. By aggregating patients,

these measures can also more readily tie rewards to outcomes. This is

important because a key efficiency goal is the avoidance of acute episodes

through better chronic illness management62 – an accomplishment that

episodic measures may not be able to discern. In addition, analysis solely

of an episode’s efficiency sheds no light on the question of whether the care

was appropriate. An episode of treatment, though “efficient” in the sense

of costing relatively little, may have been unwarranted altogether. Finally,

longitudinal measures permit shared savings corresponding to the doctor’s

actual efficiency advantage, rather than an arbitrary reward amount. As

Weiner noted, for the top 30% of efficient doctors this can amount to 20%

less spending,63 far exceeding the five percent bonus paid by UHC.

However, unless Medicare providers can be organized into some sort of

accountable care organizations similar to physician group practices – on

either a mandatory or a voluntary basis – longitudinal measures will be

difficult to incorporate into payment methodology. Given the fragmented

nature of the practice of medicine, with many solo or small group-

based practitioners,64 episode-based evaluation is more feasible in the

existing environment.

X. ProspectsMedPAC staff researchers, recently returned from a series of site visits

on the topic, reported to the Commission that health plans see physician

resource use measurement as representing “the future” of health care.65

Certainly, the news that the Integrated Healthcare Association and the

QASC are initiating multi-stakeholder efforts as well adds to a sense of

inevitability about the concept. The question for policymakers is how to

incorporate efficiency measures into Medicare payment policy. Given

the unsustainable rate of growth projected for the program, doing nothing

is not an option. Inefficient resource use is also an urgent concern for

Medicare beneficiaries, who are responsible for Part B premiums

and roughly twenty percent of their health care costs through

co-insurance.

Medicare has four progressively rigorous policy

options. The first option, feedback, will soon

be implemented on a pilot basis; proposed

legislation in the House would expand it to all

doctors. The second option, public reporting,

seems to be moving ahead through private

efforts. QASC has indicated its intention to

issue reports by 2010, although resource use

reports could presumably be blocked if the

development of efficiency measures fails to

achieve consensus support.

Public policy could come into play on public

reporting through several circumstances.

First, HHS can block access to data by

continuing to contest freedom of information

requests that seek claims files identifying

physicians, or expedite access by lifting its

objections. Second, in the event of an impasse in

the proceedings of voluntary quality measurement

organizations, congressional or agency action could overrule

objections and charter an alternative process for endorsing efficiency

measurement algorithms. Under the National Technology Transfer and

Advancement Act, government policy favors the use of standards set

by voluntary consensus bodies such as NQF. But the Quality Advisory

Board proposed in S. 1544 provides an example of how NQF could be

sidestepped if necessary. Finally, HHS could post efficiency measures

on its website, as it has with hospital quality measures.

The third option, tiering Medicare physicians, poses more thorny problems.

HSC found that most employers are unwilling to charge workers more to

see an inefficient doctor; it would seem all the more difficult for elected

officials to impose this discipline on constituents. This option is further

complicated by the geographic realities of regional variation in intensity

and scarcity of doctors in rural areas. With regard to the former, we know

that inefficient physicians are concentrated in certain states.66 If, as IOM

has recommended, physicians are held to nationwide standards, one could

imagine a scenario in which the lion’s share of a region’s doctors are placed

in a lower tier, making it difficult for patients to switch. Patients in those

regions are already paying higher co-insurance because of the more intense

practice styles of their doctors. As a result, they would be punished for their

doctors’ inefficiency, at least in the short run. If there were no meaningful

34Health Law & Policy

opportunity for patients to switch doctors, the intended

incentives might not work in the long run, either.

Similarly, patients in rural areas might be served by

only a few doctors. If all were placed in a lower tier,

the patients could have no choice but to pay the higher

rate.

Medicare could closely scrutinize “outlier” doctors

identified through profiling and exclude from the

program those who do not change their practice patterns

even after receiving actionable feedback. This could

be disruptive to beneficiaries’ established relationships

with physicians. The effect on beneficiaries depends

on how many physicians were excluded from the

program – if relatively few were excluded, this could

affect existing relationships less than a tiering strategy

that placed many physicians on a tier requiring higher

cost sharing. Care would need to be taken to ensure

that doctors are labeled as “outliers” only because

they are truly recalcitrant and not because they serve

a particularly ill patient panel. One assumption

underlying these physicians’ practice style is that they

work largely in areas that have a high concentration

of physicians.67 Care needs to be taken to verify this

assumption to ensure that patients do not experience

access problems as the result of physicians’ exclusion.

Ultimately, beneficiaries and taxpayers will benefit

most from a system that most directly aligns payment

with performance. Achieving this will not be easy. A

payment structure that rewards episodic efficiency

might miss the bigger picture. MedPAC found that

when observed on a per-episode basis, physicians in a

high-cost region could appear to be more efficient than

those in a low-cost region.68

As noted earlier, efforts to assess the resource use

of individual physicians face daunting obstacles in

terms of accuracy, validity, and risk adjustment. If

resource use evaluation indeed represents “the future”

of physician payment policy, it will be necessary to

design transparent measurement mechanisms that

address all such concerns to the reasonable satisfaction

of stakeholders. Doctors who have felt aggrieved by

efficiency measures have thus far turned to the courts

and state attorneys general to overturn private efforts

– one imagines that if they felt federal measures were

unfair, they would turn to Congress. Policymakers

need to keep close watch on the ongoing private-

sector efforts to ensure that a public-domain product

that can be used by Medicare eventually emerges. If

such efforts lag, the Federal Government may have

to provide research funding and perhaps a back-up

process for certifying efficiency measures so that

physician consent to an ultimate NQF imprimatur is

not unreasonably withheld.

Among major advantages of individual physician

measures are that they would allow the Medicare

program and others to learn from physicians who

use fewer resources while maintaining a high level

of quality. They permit a better understanding of

the differences between inappropriate volume growth

and appropriate growth (e.g., from technology

changes that improve care for patients); they generate

information that could be used to identify best practices

for the treatment of specified patients and conditions;

and they promote individual physician accountability

without requiring any large-scale restructuring of the

existing physician marketplace.69

Perhaps the most serious disadvantage is the difficulty

that individual doctors and small-scale practices would

face in re-engineering care processes. HSC researchers

have described the daunting obstacles overcome by

Virginia Mason Medical Center doctors in improving

their efficiency when excluded from Aetna’s top tier.70

The HSC findings raise the question: How could

smaller provider organizations in non-supportive

cultures be expected to implement such sweeping

changes if salaried doctors in a large integrated delivery

system, supported by leadership trained in the Toyota

Production System and working in a community with

conservative medical care patterns, endured enormous

sacrifices in time and money to achieve efficiencies?

XI. Individual Accountability

Versus Shared AccountabilityIn its report on pay for performance, the IOM argued

that a primary goal of new payment incentives

should be “to stimulate collaboration and shared

accountability among providers across care settings for

better patient-centered health outcomes.”71 As noted

earlier, physician profiling builds on the assumption

that individual physicians should be accountable for

resources used in treating their patients.

Physician profiling is an “individual accountability”

approach to efficiency, one which respects the

traditional autonomy of the physician. In placing the

locus of accountability at the individual physician

level, it shares the tack taken by the PQRI measures

and by the “Medical Home” model that would give

primary care physician practices a per-patient-

per-month payment, in addition to fee-for-service

reimbursements, to coordinate the care of chronically

ill beneficiaries.72

In contrast, a “shared accountability” approach is

inspired by the staff and group models of physician

practices associated with health maintenance

organizations (HMOs) – although not by the HMO

Ultimately,

beneficiaries and

taxpayers will benefit

most from a system

that most directly

aligns payment with

performance.

35Spring 2009

itself, as it maintains fee-for-service as its basis for payment. “Shared

accountability” approaches would apply pressure on individual physicians

to act as though they were part of an integrated delivery system. Several

leading health policy experts would like to see physicians grouped into

“accountable care organizations” or “virtual networks.”73 These approaches

are based on the belief that integrated systems are more efficient and better

able to coordinate care across settings. Under these proposals, physicians

might be placed in pools based upon an “extended hospital medical staff”

that reaps bonuses or incurs penalties based on longitudinal measures of

quality (such as outcomes) or efficiency of care delivered to the entire

population served.74 Other models, involving “bundled payments,” would

induce physicians and hospitals to cooperate to improve their efficiency in

treating acute episodes by paying (or reconciling payments) en bloc.

Because only a relatively small proportion of America’s physicians are

organized into staff or large group practices, the individual accountability

approach is viewed as better able to take the medical practice environment

as it is in formulating policy, rather than trying to reorganize it. Thus,

PQRI adapts Healthcare Effective Data and Information Set (HEDIS)

measures designed for health plans for use at the individual physician level,

and physician profiling could, in theory, devolve price competition from the

plan level to the individual physician level.

If the preferred attributes of integrated delivery systems—quality

measurement, efficiency incentives, and care coordination—can be

replicated through either individual accountability programs or shared

accountability programs, why would the IOM and many other health policy

experts recommend more complex and intrusive shared accountability

regimes? Based on an extensive review of research on the subject,

Laura Tollen argues that the cohesion, scale, and formal affiliations that

characterize organized delivery systems are responsible for their quality

and efficiency advantages.75 She further proposes that seven characteristics

of such systems create the dynamics necessary to achieve these advantages:

strong physician leadership, organizational culture, clear shared aims,

a governance structure, accountability and transparency, selection and

workforce planning, and patient-centered teams.76

XII. ConclusionIt is immediately apparent that although individual physician approaches

may be able to impose transparency and accountability and may pay for

creation of patient-centered teams to address chronic illness, they fall short

of creating the cohesive peer relationships that would be fostered by the

organized, shared accountability model. Physician profiling does create

some checks on peers—physicians deemed responsible for an episode

have an incentive to refer to high-quality, efficient specialists. On the other

hand, some analysts worry that once attribution rules are known, they

will be gamed, with PCPs immediately referring out complex patients to

specialists.77 The lack of longitudinal incentives also could allow gaming

through the initiation of more episodes.

In contrast, shared accountability proposals require organization and

leadership, and, in the case of the accountable care organization, would be

likely to spawn governing structures and workforce planning. Other bene-

fits would include increased ability to tie pay to outcomes, increased

incentives for providers to coordinate care, and the fact that physician

profiling would be overseen by physician peers rather than by the

government. Of course, structures created to encourage these benefits

would also be potentially vulnerable to gaming.

It should be noted that both the individual and shared accountability

approaches are intended to respect physician and patient autonomy by

retaining, while restraining, fee-for-service payment. In this regard, the

shared accountability proposals fall far short of capitated risk and managed

care practices that have troubled physicians and patients alike. When

satisfactory measures of individual physician efficiency are implemented,

policymakers will have to determine whether Medicare, in making

individual accountability rather than shared accountability the norm, would

merely be recognizing as inevitable the fragmented nature of care delivery,

or would reinforce it.

1 42 U.S.C. § 1395w-4 (2008)(establishing the SGR, which sets a target for

physician expenditures, which is permitted to grow with national income and

expansion of services to beneficiaries).

2 Growth in Health Care Costs, 110th Cong. (2008) Hearing Before the

Committee on the Budget, United States Senate (statement of Peter R. Orszag).

3 See Lewis Sandy, The Future of Physician Profiling, J. OF AMBULATORY

CARE MGMT., July 1999, at 11.

4 MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO THE CONGRESS:

MEDICARE PAYMENT POLICY (March 2005) [hereinafter MEDPAC 2005].

5 Id.

6 Id.

7 Physician Quality and Efficiency 110th Cong. (2007) Hearing Before

the House Ways and Means Subcommittee on Health (statement of of Herb

Kuhn).

8 See, e.g., Midwest Business Group on Health, Reducing the Cost of Poor

Quality Health Care Through Responsible Purchasing Leadership (2003),

http://www.mbgh.org/templates/UserFiles/Files/COPQ/copq%202nd%20

printing.pdf; John E. Wennberg, Elliott S. Fisher & Jonathan S. Skinner,

Geography and the Debate Over Medicare Reform, HEALTH AFFAIRS (2002),

http://content.healthaffairs.org/cgi/content/full/hlthaff.w2.96v1/DC1 (last

visited February 15, 2009).

9 COMM. ON REDESIGNING HEALTH INS. PERFORMANCE MEASURES, PAYMENT,

AND PERFORMANCE IMPROVEMENT PROGRAMS, INST. OF MED. OF THE NAT’L

ACADS., REWARDING PROVIDER PERFORMANCE: REALIGNING INCENTIVES IN

MEDICARE, NAT’L ACADS. PRESS (2006), available at http://books.nap.edu/

openbook/0309102162/gifmid/R1.gif (last visited February 15, 2009).

10 NAT’L COMM. FOR QUALITY HEALTH CARE, CEO SURVIVAL GUIDE TO PAY

FOR PERFORMANCE (2006).

11 COMM. ON QUALITY OF HEALTH CARE IN AMERICA, INST. OF MED., CROSSING

THE QUALITY CHASM: A NEW HEALTH SYSTEM FOR THE 21ST CENTURY, NAT’L

ACAD. PRESS (2001).

12 Agency for Healthcare Research and Quality, Final Report: Identifying,

Categorizing, and Evaluating Health Care Efficiency Measures (2008).

13 Dartmouth Institute for Health Policy and Clinical Practice, Dartmouth

Atlas Project Topic Brief: Health Care Spending, Quality and Outcomes

(2009).

14 Sandy 1999, supra note 3.

15 MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO THE CONGRESS:

ASSESSING ALTERNATIVES TO THE SUSTAINABLE GROWTH RATE SYSTEM (March

2007) [hereinafter MEDPAC 2007].

16 Id. at 145. (This has also been referred to as an “outlier” approach, or a

“practice pattern” or “clinical resource measurement” approach).

17 See MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO THE CONGRESS:

MEDICARE PAYMENT POLICY (March 2009).

18 Also worth noting is that some care cannot be attributed to any

physician.

19 Inst. Med. supra note 5 at 86.

20 CONSUMER-PURCHASER DISCLOSURE PROJECT, MORE EFFICIENT PHYSICIANS:

A PATH TO SIGNIFICANT SAVINGS IN HEALTH CARe (July 2003), http://healthcare

disclosure.org/links/files/MedicareSavings.pdf.

36Health Law & Policy

21 MEDPAC 2005, supra note 4.

22 Id.

23 GOV’T ACCOUNTABILITY OFFICE, MEDICARE: FOCUS ON PHYSICIAN PRACTICE

PATTERNS CAN LEAD TO GREATER PROGRAM EFFICIENCY, U.S. GOV’T

ACCOUNTABILITY OFFICE (April 2007), http://www.gao.gov/cgi-bin/getrpt?

GAO-07-307 (last visited February 15, 2009).

24 Id.

25 DEBRA A. DRAPER, ALLISON LIEBHABER, AND PAUL B. GINSBURG, HIGH-

PERFORMANCE HEALTH PLAN NETWORKS: EARLY EXPERIENCES, CENTER FOR

STUDYING HEALTH SYSTEM CHANGE ISSUE BRIEF NO. 111, CENTER FOR STUDYING

HEALTH SYSTEM CHANGE (May 2007).

26 Id.

27 Id. at 1.

28 Id.

29 Id.

30 Supra note 25 at 1.

31 Id.

32 See Sarah Hudson Scholle et al, Availability of Data for Measuring

Physician Quality Performance, 15 Am. J. of Managed Care 67 (2009).

33 One issue receiving attention from researchers is the number of cases

required to assign reliable rankings to physicians, which may exceed the

number of episodes that most individual physicians have treated.

34 See, e.g., Howard B. Beckman, Thomas Mahoney & Robert A.

Greene, Current Approaches to Improving the Value of Care: A Physician’s

Perspective (2007).

35 MEDPAC 2007, supra note 15.

36 “CMS Launches Effort to Gauge Physician Resource Use to Control

Costs,” Inside CMS, June 1, 2006.

37 MEDPAC 2005, supra note 4.

38 T. G. McGuire and M. Pauly, 10(4) Physician response to fee changes

with multiple payers, J. HEALTH ECON. 385 (1991).

39 Medicare Quality Enhancement Act of 2007, S. 1544, 110th Cong.

(2007).

40 Id.

41 Consumers’ Checkbook, Ctr. for Study of Servs, v. U. S. Dep’t of Health

and Human Servs., No. 07-5343 (D.C. Cir. January 30, 2009).

42 DEP’T OF HEALTH AND HUMAN SERVS., FOUR CORNERSTONES, www.hhs.gov/

valuedriven/fourcornerstones/index.html (last visited February 5, 2009).

43 See supra note 12.

44 Id.

45 Stephen Singer, Fairfield physicians sue insurers over doctor

designations, BOSTON GLOBE, August 14, 2007.

46 New York Attorney General Press Release, November 20, 2007, www.

oag.state.ny.us/press/2007/nov/nov20b_07.html.

47 Compuware Corp. v. Moody’s Investors Servs., 499 F.3d 520 (6th Cir.

2007).

48 Integrated Healthcare Assoc., Integrated Healthcare Association

Announces New Efficiency Measure in Pay for Performance to Improve

Healthcare Quality and Reduce Costs, February 15, 2007, www.iha.

org/021507.pdf.

49 Robert Wood Johnson Found., New Support and Collaboration from

the Robert wood Foundation to Accelerate the Work of the Quality Alliance

Steering Committee, Robert Wood Johnson Foundation website October 3,

2007, www.rwjf.org/newsroom/newsreleasesdetail.jsp?productid=22371 (last

visited February 16, 2009).

50 CONSUMER-PURCHASER DISCLOSURE PROJECT, PATIENT CHARTER FOR

PHYSICIAN PERFORMANCE MEASUREMENT, REPORTING AND TIERING PROGRAMS:

ENSURING TRANSPARENCY, FAIRNESS AND INDEPENDENT REVIEW (April 1, 2008).

51 Associated Press, Doctors’ group sues state over physician rankings,

BOSTON HERALD (May 21, 2008).

52 STUDY PANEL ON FEE-FOR-SERVICE MEDICARE, NAT’L ACAD. OF SOCIAL

INS., FROM A GENERATION BEHIND TO A GENERATION AHEAD: TRANSFORMING

TRADITIONAL MEDICARE (January 1998).

53 Id.

54 NAT’L ECON. COUNCIL AND DOMESTIC POLICY COUNCIL, THE PRESIDENT’S

PLAN TO MODERNIZE AND STRENGTHEN MEDICARE FOR THE 21ST CENTURY (July 2,

1999).

55 Id.

56 COMM. ON REDESIGNING HEALTH INS. PERFORMANCE MEASURES, PAYMENT,

AND PERFORMANCE IMPROVEMENT PROGRAMS, INST. OF MED. OF THE NAT’L

ACADS., Performance Measurement: Accelerating Improvement, Nat’l Acads.

Press (2006).

57 See Lewis G. Sandy, Driving Quality and Affordability in a Consumer-

Focused World, Presentation at Center for Value-Based Insurance Design

Symposium (May 1, 2007).

58 Inst. Med. supra note 5 at 93.

59 Id. at 94.

60 See National Committee for Quality Healthcare (2006). The distinction

between “episodic” and “longitudinal” as used here has not gained universal

acceptance. Some analysts refer to “longitudinal episodes.” For purposes

of this discussion, “episodic” refers to resource use occurring over a

relatively brief period of time, measured on a per-patient, per-episode basis;

“longitudinal” refers to resources used in the care of a defined population

over a prolonged period of time.

61 See MICHAEL TRISOLINI, GREGORY POPE, JOHN KAUTTER AND JYOTI

AGGARWAL, MEDICARE PHYSICIAN GROUP PRACTICES: INNOVATIONS IN QUALITY

AND EFFICIENCY, THE COMMONWEALTH FUND (December 2006), http://www.

cms.hhs.gov/DemoProjectsEvalRpts/downloads/PGP_Conference_Report.

pdf.

62 Halstead R. Holman, What should be incentivized in care of chronic

illness? 3 Chronic Illness 194 (2007).

63 Supra note 20.

64 Kaiser Permanente Institute for Health Policy, Patient-Centered Care and

the Health Care Reform Agenda: A Roundtable Discussion (2009) available

at http://www.kpihp.org/publications/docs/patientcenteredcare.pdf (last

visited April 17, 2009)

65 TIMOTHY LAKE, MARGARET COLBY, AND STEPHANIE PETERSON, HEALTH

PLANS’ USE OF PHYSICIAN RESOURCE USE AND QUALITY MEASURES: REPORT TO

THE MEDICARE PAYMENT ADVISORY COMMISSION, MATHEMATIC POLICY RESEARCH

(October 2007).

66 Elliott Fisher, David Wennberg, Therese A. Stukel, and Daniel J.

Gottlieb, Variations in the Longitudinal Ffficiency of Academic Medical

Centers, Health Affairs (2004) (web exclusive), http://content.healthaffairs.

org/cgi/reprint/hlthaff.var.19v1.pdf.

67 See Center for the Evaluative Clinical Sciences, Dartmouth Atlas Project

Topic Brief: Supply Sensitive Care (2007).

68 Medicare Payment Advisory Commission, Report to the Congress:

Increasing the Value of Medicare (June 2006).

69 Byron Thames, Am. Ass’n of Retired Persons, Statement Before the

Subcommittee on Health, House Committee on Energy and Commerce

(March 6, 2007), http://energycommerce.house.gov/cmte_mtgs/110-he-

hrg.030607.Thames-Testimony.pdf.

70 Hoangmai H. Pham, Paul B. Ginsburg, Kelly McKenzie, and Arnold

Milstein, Redesigning Care Delivery in Response to a High-Performance

Network: The Virginia Mason Medical Center, 26(4) HEALTH AFFAIRS (2007),

http://content.healthaffairs.org/cgi/reprint/26/4/w532.pdf. .

71 See MEDPAC 2007 supra note 15, supra text accompanying note 7.

72 Tax Relief and Health Care Act of 2006, H.R. 6111, 109th Cong. § 204

(2006).

73 Elliott S. Fisher, Douglas O. Staiger, Julie P. W. Bynum, and Daniel J.

Gottlieb, Creating Accountable Care Organizations: The Extended Hospital

Medical Staff, (26)(1) Health Affairs (2007), http://content.healthaffairs.org/

cgi/content/abstract/26/1/w44 (last visited February 16, 2009).

74 MEDPAC 2007, supra note 15.

75 LAURA TOLLEN, PHYSICIAN ORGANIZATION IN RELATION TO QUALITY AND

EFFICIENCY OF CARE: A SYNTHESIS OF RECENT LITERATURE, THE COMMONWEALTH

FUND (April 2008), available at http://www.commonwealthfund.org/Content/

Publications/Fund-Reports/2008/Apr/Physician-Organization-in-Relation-to-

Quality-and-Efficiency-of-Care--A-Synthesis-of-Recent-Literatu.aspx (last

visited February 16, 2009).

76 Id.

77 The Medical Home model’s shared savings feature (borrowed from the

PGP demonstration) should also encourage carefully considered referrals, but

the model assumes rather than assures the cooperation of specialists who do

not share in the add-on payment or savings bonus.

37Spring 2009

I. IntroductionIn 1998, after a contentious debate, California became

the only state to enact a health care statute broadly

mandating insurers to reimburse all surgical procedures

that fall within its definition of “reconstructive

surgery.”1 There are two pending class action lawsuits

alleging that two large insurers are in violation of the

California statute by failing to cover certain surgical

procedures within its definition of “reconstructive

surgery.” 2

Under the current California statute, health care

service plans are mandated to reimburse a much

greater spectrum of surgeries, including non-medically

necessary surgical procedures with the sole purpose of

creating an aesthetically “normal appearance.”3 The

plaintiffs in the two suits claim the insurers are in

violation of the statute by applying a blanket policy

of denying reimbursement for all reconstructive

surgery claims to remove excess skin following

weight loss due to bariatric surgery (a broad term

including gastric bypass surgery), a treatment for

morbid obesity.4 This surgical procedure highlights

the statute’s impermissibly ambiguous construction

and illustrates how a common and costly surgery, not

falling precisely into the statute’s broad definition of

reconstructive surgery, is causing conflicts between

patients and insurers over what procedures are eligible

for insurance coverage.5

This article argues that the California legislature

delegated an improper amount of discretionary

authority to the Department of Managed Health

Care (DMHC), the administrative agency tasked to

enforce this statute, by allowing unelected agency

officials to unconstitutionally exercise legislative

power. By failing to draft more instructive standards

for the agency to follow, the California statute violates

the nondelegation doctrine by assigning legislative

lawmaking power to an administrative agency.

Part II details the difference between reconstructive and

cosmetic surgery, outlines the contentious debate over

passing the California law, notes the claims made in the

first significant pending class action suits brought under

the statute’s provision defining reconstructive surgery,

and introduces the nondelegation doctrine as a method

of challenging the constitutionality of overly broad

delegations of legislative power. Part III argues that

the California statute is unconstitutional for violating

the nondelegation doctrine. Part IV suggests several

policy recommendations for future health care

statutes, and more specifically, recommends that

future healthcare statutes not broadly and ambiguously

mandate insurance coverage for an expansive

class of surgeries and instead, narrowly target the

eligible individuals like the Federal Women’s Health

and Cancer Rights Act of 1998 (WHCRA). The

article concludes that the California statute should

either be constitutionally challenged because of its

impermissibly ambiguous delegation of lawmaking

power or amended to allow greater predictability and

guidance for the DMHC to follow.

II. Background

A. The Difference Between Reconstructive

and Cosmetic Surgery

As surgical procedures become increasingly common

avenues of patient treatment regimes and the cost of

health care concurrently rises, an inevitable conflict

arises between the insurers and patients as to what

procedures should elicit insurance coverage.6 The

American Medical Association (AMA) defines cosmetic

surgery, not covered under most insurance policies, as

surgery “performed to reshape normal structures of

the body in order to improve the patient’s appearance

and self-esteem.” 7 The AMA defines reconstructive

surgery as surgery “performed on abnormal structures of

the body, caused by congenital defects, developmental

abnormalities, trauma, infection, tumors or disease” and

is “generally performed to improve function, but may

also be done to approximate a normal appearance.”8

The California statute’s definition of reconstructive

surgery and cosmetic surgery closely parallels the

* Adam S. Frankel is a J.D. Candidate, May 2010, at

American University Washington College of Law. He

would like to thank his mother, Dr. Marie Frankel, for

the inspiration to write this article.

CALIFORNIA HEALTH INSURANCE LAW OPENS

THE FLOODGATES FOR A POTENTIALLY

UNSUSTAINABLE AMOUNT OF PLASTIC SURGERIES:

WHAT WENT WRONG AND HOW TO FIX IT

Adam S. Frankel*

38Health Law & Policy

AMA’s respective definitions.9 However, the statute, like the AMA’s

definition, does not define the meaning of several provisions. Prior to the

enactment of the California statute, insurance companies only covered

medically necessary procedures. By adopting a standard that allows non-

medically necessary procedures for the purpose of creating a “normal

appearance,” the current law mandates insurers to cover an increasingly

large amount of surgeries.10

When certain surgical treatments create other conditions that might not

functionally impair the patient, problems arise as to the necessary conditions

that must be present to receive additional coverage.11 Given the increasing

number of obese Americans, a significant issue for insurers nationwide is

whether the surgical removal of excess skin following bariatric surgery for

obesity is a covered procedure.12

Bariatric surgery, which includes gastric bypass surgery, is now a common

treatment option for the disease of obesity.13 As a result of this increase

in the surgery’s popularity as well as its improved safety and efficacy, more

patients are seeking insurance reimbursement for excess skin removal,

claiming the excision of the skin that fails to contract following bariatric

surgery is a reconstructive and not a cosmetic procedure.14

A problem arises with classifying this surgery as reconstructive under the

statute’s definition because the excess skin is not caused by a “disease”

itself, but rather indirectly by the surgical procedure treating the disease of

obesity.15 Thus, the lawmaker’s legislative intent as to whether a disease

causes the excess skin is unclear given the statute’s nebulous language.16

Under the current California statute, in order to warrant insurance coverage

for the reconstructive skin excision surgery following bariatric surgery, the

excess skin must be both an abnormal structure of the body caused by a

disease and must either improve function or create a normal appearance, to

the extent possible.17

B. The Contentious Debate Over the California Law

California is the only state with a law both defining cosmetic and

reconstructive surgery and mandating every health care service plan to

cover what it defines as “reconstructive surgery.”18 Prior to the current

law’s enactment, health care service plans that included hospital or surgical

benefits covered reconstructive surgery for the purpose of restoring function,

but not purely to restore normal appearance as the current law does.19

The California Society of Plastic Surgeons (CSPS) lobbied for legislation,

citing instances when insurance companies would deny coverage for

surgery that would correct physical deformities in patients, often children.20

The insurers claimed these surgeries were not medically necessary because

a person could continue to normally function without undergoing the

procedure.21

During the legislative debate over this law, an eclectic body of interest

groups expressed opinions.22 Advocates for the bill favored broad

coverage of surgeries, stating that insurers should not have the ability to

deny coverage of reconstructive surgery to repair physical abnormalities.23

Advocates were concerned with the trend among insurers to employ cost-

cutting measures that they believed negatively affected patient care.24

Other supporters believed that denying coverage for physical abnormalities

may also have a negative psychological impact on the patient.25

Opponents of the legislation argued that the bill created an ambiguous order

that is extremely difficult to implement.26 Further, opponents believed

that this legislation would make reconstructive surgery susceptible to

fraud and would cost an inordinate amount of resources to implement and

maintain.27

C. An Overview of the Pending California Cases Regarding

Health & Safety Code § 1367.63

The two pending class action lawsuits brought under Section 1367.63

of the California statute are before the Superior Court for the County

of Los Angeles.28 The plaintiffs are making identical claims against

two large insurance companies.29 Of the two suits, Cox v. Health Net

of California, Inc. is further along in litigation so it is the focus of this

article’s examination.30

The first cause of action against the insurers is for breaching their health plan

contracts in violation of Section 1367.63 by applying a policy of denying

all claims for the reconstructive surgery of excess skin following weight

loss from bariatric surgery.31 The second cause of action is for violating

the Unfair Competition Law (UCL).32

Although it is uncertain whether these suits will make it to trial, they serve

as the first precedents for litigating under this sweeping provision of the

statute.33 In the event that these cases make it to trial and the court interprets

the meaning of Section 1367.63, the court will likely have difficulty

interpreting and applying the statute’s language to specific procedures in

determining whether they are reconstructive.34

D. Overview of the Nondelegation Doctrine

The nondelegation doctrine is a constitutionally rooted separation of powers

principle that prevents the legislature from delegating legislative power

to another branch of government.35 However, beginning in the twentieth

century, legislatures at the state and federal level began delegating broad

discretionary authority to unelected administrative agencies to regulate

complex areas that exceeded the capacity of lawmakers’ expertise and was

limited by time restraints.36 As a result of lawmakers’ lack of specialized

expertise in highly technical areas, legislators write laws deciding the

fundamental policy choices, while leaving the agency discretion to craft

and implement effective and efficient regulatory laws.37

Noteably, the legislature cannot constitutionally vest limitless and ill-defined

authority to the administrative agencies and must provide a framework

of guiding principles for the agency to follow.38 This doctrine forces a

politically accountable legislature to make policy choices as opposed to

appointed administrative officials.39 The Supreme Court in the modern era

has rejected this doctrine and in over sixty years has upheld all delegations,

no matter how broad, as proper delegations of authority.40

The Supreme Court’s nondelegation jurisprudence states that Congress

must provide “intelligible principles” in order to guide agencies’ exercise

of their discretionary authority.41 By not striking down extremely broad

regulatory statutes, the Court has signaled its approval of delegating great

discretionary regulatory authority in areas of complex expertise, and also

that the Court, like Congress, is ill-equipped to draw the appropriate lines.42

In Mistretta v. United States, Justice Scalia, the only modern advocate of the

doctrine sitting on the Court, argued in sole dissent that Congress’ delegation

39Spring 2009

was improper because the U.S. Sentencing Commission possessed broad

discretion to make “value judgments and policy assessments.”43 Further,

the Court has held it unconstitutional for Congress to transfer legislative

functions without imposing procedural safeguards curbing illegitimate

exercises of discretionary authority.44

The WHCRA is both an example of a constitutional delegation of regulatory

power and an instructive paradigm for statutorily mandating insurance

coverage for a specific surgical procedure meant to produce aesthetic

normality by applying well-defined objective standards not susceptible to

impermissibly flexible administrative interpretations.

E. The Federal Women’s Health and Cancer Rights

Act of 1998

The WHCRA mandates insurance coverage for all stages of breast

reconstruction for individuals receiving benefits for medically necessary

mastectomies.45 This coverage extends to surgical procedures solely meant

to produce symmetrical appearance, an aesthetic criterion.46 Additionally,

this law does not equate to unrestricted coverage based on a subjective,

autonomous decision by the patient.47 This law, narrowly tailored in its

purpose, carefully defines the individuals it seeks to cover and does not

broadly mandate coverage for a general area of surgery.48

III. AnalysisDespite the reluctance of the judiciary to accept the application of the

nondelegation doctrine, California courts should hear a challenge applying

the doctrine to the California statute. Although the pending lawsuits are

not facial challenges to the law’s constitutionality, they may interpret

the meaning of “reconstructive surgery” and serve as the first examples

of litigation to guide future challenges made under the poorly crafted

§ 1367.63.49

A. The Pending Class Action Suits Serve as Guideposts

for Litigating Under the California Statute

The main issue the court must resolve is whether judicial review is currently

proper for this case.50 Health Net, the Defendant insurer, correctly argues

that the DMHC has exclusive jurisdiction over this action because the

plaintiff’s claims call for the determination of Health Net’s regulatory

compliance with a provision in the Knox-Keene Act.51 The court in Schmidt

v. Foundation Health expressed concern noting that when a legislature

intends an agency to occupy “completely the field of health service plans,”

one must be cautious of any intrusion into the agency’s function by seeking

remedies in other venues.52 Although the statute is silent on this issue,

California case law suggests an individual should have a private right of

action in this circumstance.53

Although Health Net acknowledges that individuals can sue for acts made

unlawful by the Knox-Keene Act, it narrowly reads the act and emphasizes

that the law does not specifically outlaw having a policy of refusing to cover

the surgical removal of excess skin following weight loss due to bariatric

surgery for morbid obesity.54 Although this plain meaning reading is

persuasive, a court will likely follow Samura v. Kaiser Foundation Health

Plan and read the statute to allow a private right of action because Health

Net is accused of the unlawful act of violating § 1367.63 by refusing to

cover a surgery falling under its mandate.55

Even though a private right of action likely exists, the court will probably

not issue a ruling on the legal meaning of “reconstructive surgery” until the

DMHC completes its non-routine survey examining Health Net’s statutory

compliance as the judicial trend gives deference to the expertise of the

agency.56

Health Net properly invokes the doctrines of judicial abstention and

California’s primary jurisdiction doctrine in their defense.57 Employing

these legal theories frames the legal debate as a regulatory issue not

currently ripe for judicial review.

i. Judicial Abstention is Proper Because the Unique

Circumstances of Each Plaintiff’s Request is Best Handled

by the Statutorily Empowered DMHC

Judicial abstention is proper for this suit because the coverage requests

made by each plaintiff within the class action are unique to the facts and

circumstances of each request and are most appropriate for the DMHC,

experts in health care and tasked to enforce compliance with the statute,

to initially determine the insurer’s regulatory compliance.58 Similar to

Alvarado v. Selma Convalescent Hospital, where the court affirmed the

trial court’s demurrer to a class action lawsuit that alleged a skilled nursing

facility did not adequately provide care for residents, the claims made

against Health Net involve complex health care matters where judicial

involvement would assume the regulatory function of the agency.59

Due to the variety of individual patient pathologies represented in this

class action suit and the complex economic and health care implications

of issuing broad declaratory and injunctive relief requiring Health Net to

cease its alleged ‘blanket policy’ and to ‘review’ or ‘re-review’ each claim

for coverage as ‘reconstructive surgery’ under Section 1367.63, the court

will likely defer to the DMHC initially to make a conclusion on Health

Net’s regulatory compliance.60 Although the DMHC has already ordered

Health Net to cover the representative plaintiff’s surgery, this order was only

for the plaintiff’s specific surgery and not for the entire class of plaintiffs as

the pending non-routine survey examines.61

ii. The Primary Jurisdiction Doctrine is Properly

Applied Because the California Statute Delegated

Enforcement Power to the DMHC

The California Supreme Court declared that the primary jurisdiction

doctrine applies when a plaintiff brings a claim in court but a statute

has delegated enforcement to an administrative body.62 If applied, this

doctrine suspends the judicial process until the administrative body reaches

a conclusion on the disputed issue.63 Since the legislature vested exclusive

authority in the DMHC and the DMHC is currently conducting a non-

routine survey evaluating Health Net’s compliance with Section 1367.63,

it is the DHMC’s statutory duty to complete its evaluation before a court

orders injunctive relief.64

Thus, as expressed in Samura, an individual has a judicial remedy for

violations of actions made unlawful under the Knox-Keene Act if the agency

tasked to enforce regulatory compliance fails to do so.65 Since the statute

expressly tasks the DMHC to enforce Section 1367.63, individuals should

only have a private right of action if administrative redress is incapable

of making the plaintiff whole and the DMHC completes its non-routine

survey by issuing its final order regarding Health Net’s compliance.66

40Health Law & Policy

Further, if the court holds that all excess skin is

an “abnormal structure of the body,” and broadly

orders insurers to cover its removal regardless of the

individual patient’s circumstances, it would be deciding

a medical policy question that it is ill-equipped to

answer.67 This would set a poor precedent by allowing

the statute to become susceptible to manipulation in

covering other surgeries not traditionally thought of as

reconstructive.

As a result, the DMHC is best qualified to make an

initial judgment in this specialized and complex area

that will likely lead the court to issue a stay and defer

to the agency prior to interpreting the meaning of

Section 1367.63 and judicially resolving Health Net’s

statutory compliance. Although the suits are not facial

challenges to the law’s constitutionality and will likely

only exhibit the difficult application of its language,

a challenge under the nondelegation doctrine is one

method to invalidate the statute itself.

B. The California Statute Impermissibly

Vests the DMHC With the Discretionary

Authority To Enforce the Knox-Keene

Act Without Providing Sufficiently

“Intelligible Principles” to Guide Their

Decision Making

Similar to the federal New Deal legislation struck

down in Schechter Poultry Corp. v. United States, the

California legislature cannot delegate its lawmaking

authority to another body of government. The

California Supreme Court stated that in interpreting a

statute, courts should determine the legislature’s intent

to effectuate the purpose of the law and that laws

must not give an administrative agency the ability to

exercise greater discretion than is necessary to achieve

the law’s purpose.68

In Schechter, the Court recognized the need for

regulations focusing on a “host of issues with which

the national legislature cannot deal directly,” while

also acknowledging that Congress cannot individually

police every area of regulation.69 Although it is

improper for the California legislature to undermine

the necessary regulatory function of the DMHC by

enforcing and crafting complex health care regulatory

laws itself, it cannot constitutionally delegate total

lawmaking power to the DMHC.

The California legislators failed to craft a sufficiently

specific enabling act in accordance with the Supreme

Court’s requisite standard of providing intelligible

principles for the DMHC to follow. In order to be

reconstructive, the California statute merely requires

that the surgery must correct or repair an “abnormal

structure of the body.”70 The statute does not define

the meaning of abnormal structure and, as a result,

consistent application and interpretation by the DMHC,

insurers, and physicians as to what conditions constitute

an abnormal structure of the body is doubtful.71

Further, the statute broadly defines an eligible

justification for having reconstructive surgery as to

create a “normal appearance, to the extent possible.”72

This language creates an impermissibly flexible and

subjective statute susceptible to interpretive problems.

By using subjective language like “normal,” the

legislators removed objective predictability and gave

the DMHC virtually unfettered discretionary authority

in coverage decisions.73 This wording creates the

possibility for patients to shop around for a doctor who

will certify that his/her excess skin is an “abnormal

structure of the body” caused by a “disease,” and that

the surgery should be covered because the removal of

excess skin would create more than a minimal aesthetic

improvement in achieving a “normal appearance”

according to the doctor’s personal opinion.74

The DMHC, insurers, and physicians need detailed

guidance on how to consistently and objectively

determine if a patient’s requested surgery is recon-

structive.75 Under the statute’s current construction, one

may argue that a particular procedure is reconstructive

surgery even though it only corrects a slight aesthetic

abnormality within medically normal ranges.76

The statute also fails to define what conditions should

be characterized as a “disease” and since there is no

uniformly accepted definition as to what constitutes a

disease, the DMHC again does not have the necessary

“intelligible principles” to determine what conditions

the legislature intended to be considered a disease

under the statute.77 The example regarding the surgical

removal of excess skin that fails to retract following the

41Spring 2009

treatment of obesity with bariatric surgery exemplifies

the difficulty of classifying whether a disease, under

the statute’s language, causes certain conditions

warranting classification as reconstructive surgery.78

Arguably, the disease of obesity does not directly

cause the excess skin but merely is an unavoidable

side effect patients voluntarily accept by undergoing

the treatment of obesity with bariatric surgery.79 In

contrast, it is also arguable that the treatment of excess

skin is merely a continuation of the treatment of the

patient’s obesity and as a result, the disease of obesity

causes the excess skin.80

Like the other provisions in the California statute, the

legislators failed to define what constitutes “improve[d]

function.”81 Since varying degrees of functional

improvements exist, this term is also susceptible to

subjective interpretation.82 For example, although

hanging skin can pose problems when it reaches a

certain level, not all excess skin poses problems.83 The

sweeping statute is not helpful to allow for individual

considerations regarding coverage determinations to

a diverse patient population.84 Arguably, having this

excess skin has a negative psychological effect on the

patient and, as a result, the surgery is reconstructive

because it would improve mental health.85 In a New

York civil court case, the court held that a seventeen-

year-old male’s surgical excision of enlarged breast

tissue was covered under his policy because of the

psychological problems caused by the excess breast

tissue.86 By failing to sufficiently clarify whether

psychological justifications are alone sufficient for

coverage, the legislature again failed to provide the

necessary “intelligible principles” for the DMHC to

follow.87

Although the legislature’s intent was to provide

eligible individuals with the necessary compensation

for surgeries falling under the statute’s definition of

“reconstructive surgery,” by failing to adequately

define the necessary conditions that must be present

to consistently effectuate this intent, the California

legislators violated the nondelegation doctrine by

allowing the DMHC to improperly exercise a greater

amount of discretion than necessary to fulfill the

legislature’s intent.

C. The California Statute Impermissibly

Vests the DMHC With Discretionary

Decision Making Authority Over Complex

Policy Questions

By mandating insurance companies to reimburse all

procedures under its broad definition of reconstructive

surgery, the legislature improperly vested the DMHC

with complex policy assessments.88 Although mod-

ern jurisprudence shows an extreme reluctance to

strike down regulatory delegations of power, recent

case law upholding broad legislative delegations is

distinguishable from the subject matter of the California

statute. California’s jurisprudence states that to prevent

unelected agencies from improperly rendering policy

decisions, the legislature must utilize a “yardstick” for

the administrative agency to follow.89

In Loving v. United States, the Supreme Court rejected

a nondelegation doctrine challenge to the President’s

prescription of aggravating factors in an Executive

Order for the imposition of the death penalty in the

military.90 The Code failed to define the “aggravating”

and “mitigating” factors to be considered and as a

result, the President exercised discretionary authority

by issuing an executive order specifying these factors.91

Although Loving argued that the President lacked

authority to define the aggravating factors enabling

the military court to issue a death sentence, the Court

rejected the nondelegation doctrine theory emphasizing

the long history of the chief executive making rules

for the military and noted that it gives Congress great

deference in organizing military affairs.92

In contrast to the subject matter in Loving dealing with

the long tradition of giving deference to the executive

branch in making military rules, the California

legislature’s delegation vests unchecked health care

regulatory and policy making authority in the hands

of an unelected agency.93 Unlike the President’s

constitutional action in Loving, the California legisla-

ture delegated its exclusive constitutionally rooted

lawmaking power to an unelected and unaccountable

body of administrative officials without adequately

clear regulations.94 The far-reaching language of

the statute forces the DMHC to improperly make

economic policy judgments by mandating insurers to

cover a fiscally unsustainable amount of claims that

may have the unintended consequence of causing

insurers to provide unaffordable health care plans. As

a result of the vast effect this may have on California

residents, elected lawmakers, not appointed agency

officials, are the proper individuals to make these

significant decisions.95

In Kugler v. Yocum, the California Supreme Court held

that the legislature properly made the fundamental

policy determination that wages for firemen in

one area should be in parity with another and that

the delegated power to effectuate this decision

was proper.96 In contrast to Kugler, the California

legislature failed to make fundamental policy choices

and allowed the DMHC to potentially mandate vast

insurance coverage for surgeries which may threaten

the long term financial vitality of California’s health

By mandating

insurance companies

to reimburse all

procedures under

its broad definition

of reconstructive

surgery, the

legislature

improperly vested

the DMHC with

complex policy

assessments.

42Health Law & Policy

care system. Based on the vague language chosen by the

California legislature in the statute, there is no sufficient

“yardstick” in California preventing the DMHC from

improperly rendering policy assessments.97

D. The California Statute Provides

Insufficient Procedural Safeguards to

Adequately Curb the DMHC’s

Discretionary Authority

California jurisprudence suggests that procedural safe-

guards checking the delegated body’s potential abuse of

power are more important than substantive regulations

in examining the constitutionality of a statutory delega-

tion of power.98 Further, the California Supreme Court

has noted that it is unconstitutional for a legislature to

delegate authority without establishing a mechanism

to assure the proper implementation of its policy deci-

sions.99 Although there are minor safeguards within the

California statute, the protective checks that limit the

exercise of agency discretion are inadequate.100

In California Air Constituency v. California State

Air Resources Board, the California Supreme Court

determined that the legislature provided sufficient

procedural safeguards that checked the California State

Resources Board’s discretionary authority to delay a

program meant to control automobile emissions.101

Unlike the enabling act in State Air Resources that

provided safeguards mitigating the potential abuse

of discretionary power, the DMHC has the power to

make sweeping coverage conclusions without adequate

safeguards checking its discretion.102

Under the California statute, if the insurer denies a

claim, a patient may challenge the insurer’s decision by

requesting an Independent Medical Review (IMR) of

the health plan’s decision to deny coverage under which

medical records and other relevant information to the

coverage determination are examined by an independent

third party.103 Even if the DMHC approves an IMR

and it concludes that the coverage decision deserves

compensation, the Director of the DMHC is still the

final arbiter and possesses much discretionary latitude in

penalizing non-compliance.104

Although the statute does not explicitly provide or

deny a private right of action or mandate that claimants

exhaust their channels of administrative redress under

the administrative procedures in place, the barriers to

challenge the DMHC’s coverage decisions create an

almost insurmountable barrier for individual claimants

to pursue. In order to receive reimbursement, a claimant

can either go through a long administrative grievance

system with the ultimate final decision making ability

residing in the DMHC’s Director, or the claimant can

begin a costly litigation battle in civil court against

well capitalized insurance companies. Thus, with

the onerous and lengthy grievance process currently

available to individual claimants, and the fact that

insurer’s resources dwarf those of individual claimants,

the procedures currently in place fail to assure that the

DMHC’s discretionary power is exercised in a proper

and fair manner.

Unlike the Charter Schools Act upheld in Wilson v. State

Board of Education on the grounds that the legislature

properly made fundamental policy decisions and provided

adequate safeguards to protect against the State Board of

Education’s abuse of discretionary power, the California

health care statute fails to sufficiently curb the DMHC’s

discretionary power.105 Even though the legislative

intent is to ensure coverage for eligible individuals

that meet the definition of reconstructive surgery set

forth in the act, the procedural safeguards set forth by

the legislature are insufficient to both successfully

implement the statute’s intent and to prevent abuse of

the DMHC’s enforcement power because the safeguards

do not provide sufficiently detailed definitions for the

DMHC to follow.

In considering whether the statute’s procedural safeguards

are reasonable, a court will consider the magnitude of the

interests affected by the legislative grant of authority.106

In contrast to the act upheld in Wilson that properly

delegated discretionary authority to those with the

particularized educational knowledge and with a great

vested interest in the quality of the educational system,

the DMHC is an unaccountable agency tasked to enforce

statewide medical insurance decisions that may greatly

affect a claimant’s greatest asset, life.107 The DMHC

makes health care coverage decisions that determine

the available surgical treatment options available to

patients and thus individuals affected by the DMHC’s

regulatory decisions have a much greater personal

interest at stake than the state residents and taxpayers

challenging the constitutionality of the Charter Schools

Act in Wilson.108

As a result of the statute’s insufficiently guiding

“intelligible principles,” the great policy assessments

improperly bestowed upon the DMHC, and the lack of

adequate procedural safeguards effectively curbing the

DMHC’s discretionary authority, the California statute

is a fitting example for a constitutional challenge under

the nondelegation doctrine. Until a facial challenge to

the California law occurs, the pending lawsuits will

likely show the law’s interpretive difficulties and could

put insurers in financially unstable positions creating

concern over their future ability to afford covering

individuals who are at heightened risk of needing

medically indicated surgical procedures in the future.109

With health care

costs taking up a

greater percentage

of this nation’s

resources, statutes

require more

detailed criteria

and careful

drafting in order

to ensure insurers

continue to offer

affordable coverage

that employers

will extend to

employees.

43Spring 2009

IV. Recommendations for

Future Health Care StatutesGiven the increasingly vast amount of costly

procedures that do not fit clearly into either the

definition in Section 1367.63 of reconstructive or

cosmetic surgery, legislators may learn several lessons

from the construction of the statute.110 If a facial

challenge to the law is unsuccessful, legislators should

amend the California statute and Congress should

not adopt the identical federal bill now before it.111

This article recommends following the strategies and

methods employed by the drafters of the WHCRA

and some insurance policies when drafting eligibility

criteria for statutes mandating coverage for specific

procedures.112

With health care costs taking up a greater percentage of

this nation’s resources, statutes require more detailed

criteria and careful drafting in order to ensure insurers

continue to offer affordable coverage that employers

will extend to employees.113 Statutes should not

contain broad definitions mandating coverage for all

reconstructive surgeries but rather only once a certain

amount of insurance denials are made for a specific

procedure should a statute procedurally require the

DMHC or other equivalent administrative agencies to

investigate the insurers compliance with the statute. If

the agency finds that insurers are not in compliance and

believe a specific statute covering a defined surgery

(similar to theWHCRA) is appropriate, a process

should be created where legislators debate and decide

whether to write a law mandating insurance coverage

for patients that meet detailed medical eligibility

requirements for the specific procedure recommended

by the agency.114

Under the statute’s current construction, virtually

any surgical procedure is arguably deserving of

coverage.115 Adopting this proposition would: (1)

ensure that legislators are not wasting their time

crafting legislation for every rare procedure denied

coverage by insurers; (2) save scarce judicial

resources by utilizing the expertise of the DMHC or

equivalent administrative agencies to make initial but

limited coverage determinations; and (3) sufficiently

place lawmaking and policy authority in the elected

legislature by allowing them to balance the fiscal ability

of insurance companies (and indirectly on individual

consumers of health care) to cover certain procedures

and the desire to follow the agency’s recommendation

to have specific surgeries universally covered.116

Once legislators begin drafting the legislation, they

should narrowly tailor the language, much like the

WHCRA, in order to ensure that only those intended

to receive coverage actually do.117

Implementation of laws that mandate coverage for

reconstructive surgery for the sole purpose of eliciting

‘normal appearance’ without further guidelines is not

advisable. If California lawmakers wish to keep the

statute’s basic definitions, the legislators should amend

the statute to mandate the utilization of an objective

method like the Pittsburgh Rating Scale to mitigate the

statute’s susceptibility to inconsistent and subjective

interpretation.118 Although a physician’s treatment

decision always holds a degree of subjectivity in

deciding the appropriate treatment strategy for

patients, the standard currently utilized in California

and in the proposed Reconstruction Act of 2007 is

greatly susceptible to subjectivity and will necessarily

lead to unpredictable results in insurance coverage.119

The WHCRA is a guiding example requiring an

objective basis for determining whether a surgery is

coverable.120

In contrast to the California statute that employs

inherently subjective language like ‘normal’ and

‘abnormal,’ the WHCRA uses the word ‘symmetrical’

to describe the eligibility for reimbursement.121

Although the WHCRA does not define ‘symmetrical’

and is not as numerically quantitative as the Pittsburgh

Rating Scale, courts can more objectively interpret the

popular meaning of ‘symmetrical’ than the language

in the California statute.122 By selecting a word that

has a quantifiable definition, the language chosen in

the WCHRA serves as a useful precedent to guide

legislators in amending the statute’s language.

Another method of solving the statute’s deficiencies

would be to return to the old law’s standard covering

only those surgeries that will cause functional

improvements. However, if amended, legislators

should specifically include psychological functioning

in the statute as a sufficient justification for cover-

age.123 Adding psychological impairments into the

statute’s language appeases the law’s advocates who

noted in the congressional debate that the old law

failed to take into account the psychological trauma

that accompanies physical disfigurement.124 Providing

authoritative documentation of the physiological or

psychological impairment should be required to receive

coverage.125 Since plastic surgeons are not qualified

to diagnose psychological afflictions, patients claiming

a psychological justification should either obtain a

certified psychologist or psychiatrist to diagnose or

present a documented psychological difficulty directly

caused by their condition.

Lawmakers should also amend the statute to specifically

require objective and up to date scientific criteria in

making their decisions on: (1) which surgeries elicit

functional improvements; (2) whether the condition

Implementation of

laws that mandate

coverage for

reconstructive

surgery for the sole

purpose of eliciting

‘normal appearance’

without further

guidelines is not

advisable.

44Health Law & Policy

is an abnormal structure of the body; and (3) whether the surgery will

elicit a normal appearance.126 Objective criteria and rating systems like

the Pittsburgh Rating Scale, should be required to more consistently

and accurately determine whether the desired surgery is cosmetic or

reconstructive.127

V. ConclusionAlthough a successful facial challenge to a statute using the nondelegation

doctrine has not occurred on the federal level since the New Deal Era, the

California statute is a fitting example for employing this doctrine at the

state level. The statute unconstitutionally delegates legislative power to an

administrative agency by failing to provide adequate guiding principles for

the DMHC to follow, by allowing an unelected agency to make complex

policy decisions, and by lacking the necessary procedural safeguards

needed to curb the DMHC’s discretionary authority.

As the line between cosmetic and reconstructive surgery blurs and health

care costs make up an increasing amount of our GDP, statutes need more

definitive standards for regulatory agencies, insurers, and physicians

to follow. The ambiguous California statute, though well intentioned,

requires a consistent and accurate method to determine whether the desired

surgery is cosmetic or reconstructive as intended by its crafters. Lawmakers

need to make a policy choice balancing the need to treat the necessary

patients and conserving increasingly scarce economic resources.128 Even

though the California statute is in accordance with the AMA’s definitions

of reconstructive and cosmetic surgery, its construction is fundamentally

flawed in mandating coverage of all procedures within its vague and

subjective definition of reconstructive surgery. Health care insurance

statutes require objective and precise statutory standards capable of long-

term fiscal sustainability as opposed to poorly defined sweeping insurance

mandates in order to most accurately and efficiently reimburse patients for

the appropriate surgical procedures.

1 See CAL. HEALTH & SAFETY CODE § 1367.63(c) (West 1999).

2 See Cox v. Health Net of Cal., Inc., No. BC386181 (Cal. Super. Ct. Feb.

26, 2008) (pending in the Superior Court of the State of California for the

County of Los-Angeles-Central Civil West).

3 But see § 1367.63(e)(1) (noting that if there is a more appropriate surgical

procedure, coverage can be denied).

4 See First Amended Class Action Compl. for Declaratory & Injunctive

Relief at 5, Cox v. Health Net of Cal., Inc., No. BC386181 (Cal. Super. Ct.

Feb. 26, 2008) (seeking declaratory relief to enjoin Health Net to review or

re-review all denials for certain skin excision surgeries).

5 See § 1367.63(c) (highlighting that using language like “caused by

disease” without providing further guidance creates interpretive problems).

6 See Cal. Ass’n of Health Plans, The Rising Cost of Healthcare: Causes

(2008), available at http://www.calhealthplans.com/7press/documents/_

Affordability%20Causes.pdf (noting that in 2007, health spending was $2.2

trillion and consumed 16.3 percent of the gross domestic product and by

2017, spending is expected to reach $4.3 trillion taking up an estimated 19.5

percent of the gross domestic product).

7 See Am. Soc’y of Plastic Surgeons, Insurance Coverage: A Patient’s

Guide (2008), available at http://www.plasticsurgery.org/patients_consumers/

planning_surgery/insurance_coverage.cfm [hereinafter A Patient’s Guide]

(emphasizing that cosmetic surgery is elective and not considered a medical

necessity); Am. Soc’y of Plastic Surgeons, ASPS Recommended Insurance

Coverage Criteria for Third-Party Payers: Surgical Treatment of Skin

Redundancy for Obese and Massive Weight Loss Patients (2006), available

at http://www.plasticsurgery.org/medicalprofessionals/health_policy/loader.

cfm?url=/commonspot/security/getfile.cfm&PageID=18091 (distinguishing

various types of skin excision surgeries and stressing patients might need

various surgeries depending on the symptoms they present).

8 See A Patient’s Guide, supra note 7 (emphasizing that the surgery’s sole

purpose may be to improve appearance).

9 See § 1367.63(c)(2).

10 Id.

11 See, e.g., Pat Speer, Obesity Surgery Spawns ‘New Frontier’ for

Plastic Surgery, PLASTIC SURGERY NEWS (2003) available at http://www.

plasticsurgery.org/medical_professionals/ publications/obesity-surgery-

spawns-new-frontier.cfm (finding after bariatric surgery, an increasing

number of patients seek coverage claiming that surgery to remove skin

failing to contract is reconstructive).

12 See Am. Soc’y of Plastic Surgeons, Practice Parameter for Surgical

Treatment of Skin Redundancy for Obese and Massive Weight Loss Patients,

(2007) available at http://www.plasticsurgery.org/medical_professionals/

loader.cfm?url=/commonspot/security/getfile.cfm&PageID=24212 (citing

that obesity effects fifty eight million people in America causing an explosive

demand for bariatric surgery and skin excision following weight loss).

13 See Alan Matarasso et al., Bariatric Surgery: An Overview of Obesity

Surgery, 119 PLASTIC & RECONSTRUCTIVE SURGERY 1357, 1358 (2007)

(explaining bariatric surgery reduces the capacity of the stomach and

prevents the mixing of food with the digestive enzymes until food is further

down the intestinal path); Kim Dixon, Medicare May Broaden Obesity

Payment, REUTERS, May 20, 2008 available at http://www.reuters.com/

article/healthNews/idUSN1914912220080520 (noting the government

may expand coverage for bariatric surgery for the ‘obese’ and not just the

‘morbidly obese’ after a study found the surgery can help reverse diabetes).

14 See generally Speer, supra note 11 (noting the current number of

surgeons qualified to operate on weight loss patients is not sufficient to meet

the growing demand).

15 See T. Oguz Acarturk et al., Panniculectomy as an Adjuvant to Bariatric

Surgery, 53 ANNALS OF PLASTIC SURGERY 360 (2004) (asserting that excess

skin is a common trait of patients who underwent bariatric surgery).

16 See CAL. HEALTH & SAFETY CODE § 1367.63(c) (West 1999) (containing

a provision explicitly noting that reconstructive surgery must correct an

abnormal structure of the body caused by a disease).

17 But see id. § 1367.63(e)(2) (stating that if only a minimal improvement in

appearance will occur after the requested surgery, denial is appropriate).

18 Id. § 1367.63(a).

19 See ASSEMB. COMM. ON INS. ANALYSIS, A.B. 1621, 1997–1998 Reg. Sess.,

(Ca. 1998) (stating the previous law required plans to cover all medically

necessary services).

20 See S. HEALTH & HUMAN SERVICES COMM. ANALYSIS, A.B. 1621, 1997–

1998 Reg. Sess., (Ca. 1998) (noting the CSPS considers these surgeries a

medical necessity).

21 See ASSEMB. COMM. ON INS. ANALYSIS, supra note 19 (applying the ‘bodily

functions’ test where if the patient can continue to function without the

surgery, coverage would be denied). See, e.g., S. HEALTH & HUMAN SERVICES

COMM. ANALYSIS, supra note 20 (noting an instance where a girl born without

an ear was refused coverage for surgery to construct an ear because the

surgery would not restore her hearing and her policy did not cover surgery

for restoring normal appearance unless the surgery is primarily to re-establish

normal function).

22 Id.

23 Id.

24 Id.

25 See id. (denying coverage for individuals who are able to hear but

have malformed ears ignores the psychological trauma of physical

disfigurements).

26 See S. COMM. ON INS. ANALYSIS, supra note 20.

27 See id. (noting the bill’s language could be interpreted to make all

reconstructive surgery medically necessary, even elective surgeries like

rhinoplasty).

28 See Cox v. Health Net of Cal., Inc., No. BC386181 (Cal. Super. Ct. filed

Feb. 26, 2008) (specifying that the plaintiff in Woelk v. Blue Cross, the other

45Spring 2009

suit, is alleging that Blue Cross is employing the same statutory violations as

Health Net).

29 See id. (having the same law firm representing the plaintiffs in both

suits).

30 Woelk v. Blue Cross of Cal., Inc., No. BC 391522 (Cal. Super. Ct. filed

May 27, 2008).

31 See Class Action Compl. for Declaratory & Injunctive Relief at 5, Cox

v. Health Net of Cal., Inc., No. BC386181 (Cal. Super. Ct. Jun. 12, 2008)

(asserting Health Net violates the statute by improperly claiming that excess

skin does not constitute an abnormal structure of the body and/or its removal

is not medically necessary).

32 See id. at 6 (claiming the insurer’s alleged blanket policy constitutes a

prohibited act of unfair competition by the UCL which specifically includes

any unlawful, unfair, or fraudulent business act or practice and unfair,

deceptive, untrue or misleading advertising).

33 See, e.g., Notice of Demurrer & Demurrer to Compl. of Plaintiff by

Health Net of California at 3, Cox v. Health Net of Cal., Inc., No. BC386181

(Cal. Super. Ct. Feb. 26, 2008) [hereinafter Demurrer] (addressing uncertain

issues like whether individuals have a private right of action under the

statute); see generally Schmidt v. Found. Health, 42 Cal. Rptr. 2d 172, 181

(Cal. Ct. App 1995) (advocating caution in seeking remedies in venues other

than those provided by the legislature); Samura v. Kaiser Found. Health Plan,

22 Cal. Rptr. 2d 20, 29 (Cal. Ct. App. 1993) (acknowledging the ability to

bring suit to enjoin acts unlawful under the Knox-Keene Act).

34 See Plaintiff’s Opposition to Defendant Health Net of California, Inc.’s

Demurrer to Compl.; Memorandum of Points and Authorities at 4, Cox v.

Health Net of Cal., Inc., No. BC386181 (Cal. Super. Ct. Feb. 26, 2008)

[hereinafter Opposition to Demurrer] (stating that the legal issue for the court

to resolve is the meaning of “reconstructive surgery” under § 1367.63).

35 See U.S. CONST. art. I, § 1. (vesting exclusive legislative power in the

Congress of the United States).

36 See, e.g., Kugler v. Yocum, 445 P.2d 303, 311 (Cal. 1968) (delegating

power to ensure that firemen’s wages were in parity with other localities);

see generally ERWIN CHEMERINSKY, CONSTITUTIONAL LAW: PRINCIPLES AND

POLICIES 319 (Richard A. Epstein et. al. eds., Aspen Publishers 2d ed. 2002)

(identifying that the rise of the modern administrative state spawned out of

the New Deal’s programs).

37 See id. at 320 (noting the last federal laws declared unconstitutional by

the Supreme Court under a nondelegation theory were New Deal legislation

exceeding the scope of Congress’s commerce power).

38 See, e.g., Mistretta v. United States, 488 U.S. 361, 379 (1989) (upholding

a delegation from the legislature to the judiciary for the intricate task of

formulating sentencing guidelines because it did not infringe on another

branch or improperly expand the judiciary’s power); A.L.A. Schechter

Poultry Corp. v. United States, 295 U.S. 495, 541-42 (1935) (holding

that there was an insufficient amount of standards to limit the delegated

discretionary authority).

39 See, e.g., Whitman v. Am. Trucking Ass’n, 531 U.S. 457, 475-76 (2001)

(upholding a delegation of power to the Environmental Protection Agency to

enforce air quality standards because Congress made the fundamental policy

decision to regulate air quality while narrowing EPA’s discretionary authority

by not allowing the agency to consider implementation costs in creating

clean air act rules).

40 See, e.g., Loving v. United States, 517 U.S. 748, 773 (1996) (upholding a

delegation to the President even without standards limiting discretion).

41 See Whitman, 531 U.S. at 472-74 (acknowledging that drafting air

quality regulations requires great expertise and noting the commerce clause

delegations struck down by the Court did not curb discretion at all).

42 See Richard Stewart, The Reformation of American Administrative Law,

88 HARV. L. REV. 1669, 1695-97 (1975) (outlining that if the judiciary strikes

down agency decisions, the administrative agencies may lose legitimacy by

exposing them to the ongoing threat of judicial invalidation).

43 488 U.S. at 413 (Scalia, J., dissenting); see Wilson v. State Bd. of Educ.,

89 Cal. Rptr. 2d 745, 759 (Cal. Ct. App. 1999) (finding that the Board of

Education was not making policy decisions but merely effectuating the

legislature’s policy choices).

44 See, e.g., A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495,

541-42 (1935) (striking down a regulation designed to both ensure poultry

quality and regulative employment because it set insufficient standards

and in fact delegated virtual law making authority to the President); Air

Constituency v. Cal. State Air Res. Bd., 523 P.2d 617, 628 (Cal. 1974)

(providing a limited and proper amount of discretionary power to the state

resource board).

45 See The Federal Women’s Health and Cancer Rights Act of 1998,

29 U.S.C. § 1185(a) (1998) (having the attending physician determine if

reasonable symmetry is attainable with reconstructive surgery).

46 See generally 143 CONG. REC. S820-01 (1997) (statement of Sen. Snowe)

(stating the fear of losing a breast is the leading reason women do not

utilize early breast cancer detection programs and covering reconstructive

surgery to achieve symmetry is necessary to return to a normal life given the

psychological damage of losing breasts to cancer).

47 See J.L.F. v. Ariz. Health Care Cost Containment Sys., 91 P.3d 1002,

1005 (Ariz. Ct. App. 2004) (requiring some medically rooted objective

support to garner insurance coverage).

48 See id. at 1006 (noting that the drafter’s intent was to provide coverage

for symmetrical appearance if the treating physician believed that undergoing

the procedure is supported by sufficiently competent evidence).

49 See Opposition to Demurrer at 4, Cox v. Health Net of Cal., Inc., No.

BC386181 (Cal. Super. Ct. Feb. 26, 2008) (alleging the sole issue in need

of judicial resolution is the legal meaning of “reconstructive surgery” under

§ 1367.63).

50 See Demurrer, supra note 33, at 3 (requesting judicial deference to the

DMHC because this is a regulatory dispute).

51 See § 1341(a) (stating expressly that the DMHC executes the laws

relating to health care service plans); Van de Kamp v. Gumbiner, 270 Cal.

Rptr. 907, 921-22 (Cal. Ct. App. 1990) (holding that pursuant to the Knox-

Keene Act’s express grant of authority, the DMHC regulates all aspects of

the regulation of health plans including financial stability, organization,

advertising and capability to provide health services).

52 See 42 Cal. Rptr. 2d 172, 181 (Cal. Ct. App. 1995) (asserting that admin-

istrative agency’s interpretation of its own regulation deserves great weight).

53 See Kasky v. Nike, Inc., 27 Cal. 4th 939, 950 (Cal. 2002) (noting that a

plaintiff may bring a UCL action even when conduct violates a statute for the

direct enforcement of which there is no private right of action).

54 See Demurrer, supra note 33, at 5-6 (stating the plaintiff failed to provide

the necessary facts involved in each coverage request, and thus has not

alleged Health Net committed acts made unlawful by the Knox-Keene Act).

55 See Samura v. Kaiser Found. Health Plan, 22 Cal. Rptr. 2d 20, 29 (Cal.

Ct. App. 1993) (holding that despite a statutory enforcement scheme, the

plaintiff still may sue to enjoin acts made unlawful by the Knox-Keene Act).

56 But see Reno v. Baird, 18 Cal. 4th 640, 660 (Cal. 1998) (finding that

although an agency’s decision is significant, statutory interpretation is an

issue of law fit for a court).

57 See Alvarado v. Selma Convalescent Hosp., 153 Cal. App. 4th 1292,

1295 (Cal. Ct. App. 2007) (requiring a trial court to become involved in an

agency’s duty to regulate complex health care issues is a proper circumstance

for judicial abstention).

58 See, e.g., CAL. HEALTH & SAFETY CODE § 1346 (West 1999) (detailing the

broad powers that the Director of DMHC possesses to ensure compliance

with the statute).

59 See Alvarado, 153 Cal. App. 4th at 1298 (indicating that abstention is

also proper where injunctive relief would be unnecessarily burdensome

to monitor and enforce or where enforcement elsewhere would be more

effective).

60 See Defendant Health Net of California, Inc.’s Notice of Motion and

Motion for an Order to Stay the Action, or Alternatively, to Dismiss Action

Without Prejudice at 6, Cox v. Health Net of Cal., Inc., No. BC386181

(Cal. Super. Ct. Feb. 26, 2008) [hereinafter Motion to Stay] (observing

that the DMHC’s Technical Assistance Guide for the Focused Survey

on Reconstructive Surgery was created to ensure plan compliance with

§ 1367.63 and is currently being used by the DMHC in conducting a non-

routine survey of Health Net’s compliance).

61 Demurrer, supra note 40, at 3.

46Health Law & Policy

62 See Farmers Ins. Exch. v. Superior Court, 826 P.2d 730, 739 (Cal. 1990)

(enunciating that the doctrine advances two policies: enhancing judicial

decision making and efficiency by taking advantage of agency expertise and

helping ensure uniform and predictable application of regulatory laws).

63 See, e.g., Jonathan Neil & Assoc., Inc. v. Jones, 94 P.3d 1055, 1063-63

(Cal. 2004) (holding the doctrine of ‘primary jurisdiction’ was proper

and issued a stay until the California Department of Insurance interpreted

insurance rules).

64 See, e.g., Alvarado, 153 Cal. App. 4th at 1303 (adjudicating a class

action case would assume regulatory power over the health care industry

through the guise of enforcing the UCL).

65 See Samura v. Kaiser Found. Health Plan, 22 Cal. Rptr. 2d 20, 31 (Cal.

Ct. App. 1993) (finding that although the plaintiff had certain remedies,

the trial court erred in assuming regulatory power over health maintenance

organizations).

66 See, e.g., CAL. HEALTH & SAFETY CODE § 1391 (West 2000) (detailing

that if a cease and desist order is issued and a timely request for a hearing

is made, the order is stayed until a hearing occurs, and also that every final

order of the DMHC is subject to review in accordance with the APA and

or judicial review); see also Motion to Stay, Cox v. Health Net of Cal., Inc.

at 9, No. BC386181 (Cal. Super. Ct. Feb. 26, 2008) (noting any review of

DMHC’s action would be subject to review in accordance with the APA and

then judicial review).

67 See § 1342(a) (declaring the legislature’s intent was to assure the role of

the health care professional as the decision maker of patient’s health needs);

see also Samura, 22 Cal. Rptr. 2d at 29-30 (acknowledging that although an

individual can sue to enjoin acts made unlawful by the Knox-Keene Act, a

court should not interfere in regulatory matters when doing so impermissibly

encroaches on the legislature).

68 See Cal. Toll Bridge Auth. v. Kuchel, 251 P.2d 4, 8-10 (Cal. 1952)

(holding the California Bridge Authority improperly exercised legislative

power not necessary to achieve the law’s purpose).

69 A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 530 (1935).

70 See S. COMM. ON INS. ANALYSIS, supra note 33 (stating the Department

of Health Services believes that subjective language hampers regulator’s

enforcement ability).

71 See Irelan v. Standard Mut. Ass’n of Cassville, 379 S.W.2d 815, 824

(Mo. Ct. App. 1964) (finding that unless otherwise noted in the policy,

courts apply the popular meaning); Webster’s II New Riverside University

Dictionary 67 (Anne H. Soukhanov ed., Houghton Mifflin Co. 1994) (1984)

(defining abnormal as ‘deviant’).

72 See S. COMM. ON INS. ANALYSIS, supra note 20 (applying normal

appearance standard mandates a much broader and costly scope of coverage).

73 See S. RULES COMM. ANALYSIS, A.B. 1621, 1997–1998 Reg. Sess., (Ca.

1998) (stating that taking the language out requiring reconstructive surgery

to be ‘medically necessary and appropriate’ removes health plans power of

discretion to deny a procedure given the enrollee’s particular condition or if it

is too risky for the enrollee).

74 See Robert F. Ryan, The Achilles Heel of Plastic Surgery: Insurance

Forms, Fraud, and Loss of Credibility, 76 PLASTIC & RECONSTRUCTIVE

SURGERY 293 (1985) (discussing insurance fraud and noting that some doctors

illegitimately cite respiratory obstruction to garner insurance coverage for

rhinoplasty).

75 But see § 1367.63(b) (attempting to mitigate subjectivity by requiring the

surgical judgment to be made in accordance with the standard of care of a

trained reconstructive surgeon).

76 See S. COMM. ON INS. ANALYSIS, supra note 20 (noting that CAHP suggested

that under the bill’s language, a scar caused by acne or an ear-piercing would

be insured irregardless of the fact that the procedures are cosmetic).

77 See J.A. Bryant Jr., Annotation, What Conditions Constitute “Disease”

Within Terms of Life, Accident, Disability, or Hospitalization Insurance

Policy, 61 A.L.R.3d 822 (1975) (outlining what courts emphasize in

determining whether a condition is a disease under the terms of insurance

policies and emphasizing it is an individualized fact specific inquiry).

78 See § 1367.63(c) (failing to offer guidance on whether conditions that

may result from the treatment of certain diseases are also considered as

caused by a disease under the statute).

79 See, e.g., Am. Soc’y of Plastic Surgeons, ASPS Recommended Insurance

Coverage Criteria for Third-Party Payers: Surgical Treatment of Skin

Redundancy for Obese and Massive Weight Loss Patients (2006), available

at http://www.plasticsurgery.org/medicalprofessionals/health_policy/loader.

cfm?url=/commonspot/security/getfile.cfm&PageID=18091 (citing that

the largest body of plastic surgeons worldwide believe that when purely to

enhance appearance, skin excision is a cosmetic procedure).

80 See, e.g., T. Oguz Acarturk et al., supra note 22, at 360 (emphasizing that

hanging skin is almost uniformly present in patients who underwent bariatric

surgery and that it causes other health problems until excised).

81 See § 1367.63(c) (failing to specify if psychological improvements

caused by a surgery is a sufficient justification to be become eligible for

reconstructive surgery).

82 See S. COMM. ON INS. ANALYSIS, supra note 20 (discussing the possibility

of fraud where patients shop around for a doctor to fraudulently certify that a

minimal functional improvement is possible with surgery).

83 See Acarturk et al., supra note 15, at 360 (noting a dense pocket of fatty

tissue usually in the abdominal cavity, called a hanging panniculus, can cause

difficulties in movement which in turn may exacerbate the patient’s weight

and cause recurrent infections).

84 See also Reconstructive Surgery Act of 2007, H.R. 2820. 110th Cong.

(2007) (introducing a federal bill employing language nearly identical to the

California statute and that identical legislation has been introduced in every

session of Congress since the 106th in 1999 with no significant movement to

become a law).

85 See Acarturk et al., supra note 15, at 360 (explaining that excess skin can

interfere with the psychological well-being and social life of the patient).

86 See Steven S. v. GHI, 787 N.Y.S.2d 828 (N.Y. Civ. Ct. 2004) (stating that

his avoidance of situations that would expose his condition and subject him

to ridicule constituted a functional defect because he was unable to function

as a normal adolescent).

87 § 1367.63.

88 See Kugler v. Yocum, 445 P.2d 303, 306 (Cal. 1968) (highlighting

that while the formulation of policy is a legislative decision, it is proper to

delegate the power to fill in the implementation details to administrative

officials).

89 See Am. Distilling Co. v. St. Bd. of Equalization, 131 P.2d 609, 612 (Cal.

Dist. Ct. App. 1942) (clarifying the legislature may not delegate authority

that abridges, expands, or modifies the enabling statute).

90 517 U.S. 748, 773 (1996).

91 See generally id. at 772-73 (summarizing the Supreme Court’s

jurisprudence regarding military questions and giving examples of proper

delegations of power).

92 Id. at 764.

93 See CAL. HEALTH & SAFETY CODE § 1341 (West 1999) (prescribing

that the DMHC and the appointed Director have the power to execute

laws relating to health service plans, the health care service plan business,

providing enrollees with access to health care services, and laws protecting

the interest of enrollees).

94 See CHEMERINSKY, supra note 36, at 323 (suggesting that the Court’s

refusal to enforce the nondelegation doctrine may undermine government

accountability as political decisions are made by unelected officials).

95 See S. APPROPRIATIONS COMM. FISCAL SUMMARY, A.B. 1621, 1997–1998

Reg. Sess., (Ca. 1998) (noting potential increases in both costs to individuals

purchasing health care and on the state in the form of higher premiums paid

on behalf of public employees and also that the bill will likely cost millions

annually).

96 See 445 P.2d 303, 311 (Cal. 1968) (holding that an unlawful delegation

occurs either when the legislature fails to render basic policy decisions or

fails to assure that they are implemented when made).

97 See, e.g., Am. Distilling Co. v. St. Bd. of Equalization, 131 P.2d 609,

612 (Cal. Ct. App. 1942) (finding that certain exercises of discretion by the

State Board of Equalization excepting certain chemicals from sales tax were

unconstitutional because they resulted in an exception not in accordance with

the statute’s purpose).

47Spring 2009

98 Wilson v. State Bd. of Educ., 89 Cal. Rptr. 2d 745, 759-60 (Cal. Ct. App.

1999); see 73 C.J.S. Public Administrative Law and Procedure § 62 (2008)

(emphasizing courts want to assure discretionary power is not unnecessarily

or indiscriminately exercised).

99 Kugler, 445 P.2d at 306-07.

100 See CAL. HEALTH & SAFETY CODE § 1374.30 (West 1994) (outlining

the independent medical review process available to those challenging an

insurer’s denial of coverage).

101 See 523 P.2d 617, 628 (Cal. 1974) (holding the provision in dispute

which ambiguously empowered the Resource Board by allowing them to

consider ‘all relevant factors’ in assessing the means of implementing the Air

Resource Act included only narrow factors directly relating to the three stated

goals of the Act).

102 See id. (stating any discretionary action by the Resource Board delaying

a pollution control program must be justified by directly relating their action

to the three specific purposes of the legislation).

103 But see § 1374.30(j) (requiring those seeking an IMR to meet specific

criteria in order to even qualify for such a review).

104 See generally id. § 1374.34 (allowing broad discretion in choosing the

method to penalize health plans for non-compliance with the statute).

105 See Wilson, 89 Cal. Rptr. 2d at 759-60 (finding the fundamental policy

choices by the legislature included giving parents, teachers, and community

members the opportunity to set up public schools with operational

independence, promoting education innovation and accomplish related

public education goals); CAL. EDUC CODE § 47600 (West 1992) (establishing

procedures for individuals to petition local school district governing boards

to establish charter public schools).

106 Matter of Powell, 602 P.2d 711, 716-717 (Wash. 1990) (en banc).

107 See Wilson, 89 Cal. Rptr. 2d at 759-60 (acting constitutionally by

creating a state system of common schools while delegating a proper amount

of power to the officers of the public school system to control curriculum,

textbooks and operations).

108 See T. Oguz Acarturk et al., Panniculectomy as an Adjuvant to Bariatric

Surgery, 53 ANNALS OF PLASTIC SURGERY 360 (2004) (outlining the variety

of serious physiologic and psychological effects hanging skin may have on

patients who underwent bariatric surgery).

109 See S. COMM. ON INS. ANALYSIS, supra note 20 (finding the California

Manufacturers Association and Californians for Affordable Health Reform

believe that this statute may cause present and potential employers to drop or

never consider adopting health plans).

110 See Alan Matarusso et al., Bariatric Surgery: An Overview of Obesity

Surgery, 119 PLASTIC & RECONSTRUCTIVE SURGERY 1357, 1360 (citing that in

2005, 144,000 individuals had bariatric surgery and an estimated 170,000 in

2006).

111 See The Reconstructive Surgery Act of 2007, H.R. 2820 110th Cong.

(2007) (clarifying that as of the date of this publication, legislators have not

yet introduced a new version of this law).

112 See, e.g., Shawkat Sati & Sonal Pandya, Should a Panniculectomy/

Abdominoplasty After Massive Weight Loss Be Covered by Insurance?,

60 ANNALS OF PLASTIC SURGERY 502, 504 (2008) (listing an example of some

insurance guidelines for panniculectomy/abdominoplasty which generally

include: 1) pannus that hangs below level of pubis; 2) patient has had

significant weight loss of 100 pounds or more, as well as the following:

a. individual has maintained stable weight for at least 6 months, and

b. if the individual has had bariatric surgery, they are at least 18 months

postoperative; and 3) one of the following: a. if there are recurrent or chronic

rashes, infections, cellulites, or non-healing ulcers that do not respond

to conventional treatment for a period of 3 months, information must be

documented in the records or b. if there is difficulty with ambulation and

interference with activities of daily living, information must be documented

in office visit records).

113 See, e.g., Jesse T. Nguyen et al., Reduction Mammaplasty: A Review

of Managed Care Medical Policy Coverage Criteria, 121 PLASTIC &

RECONSTRUCTIVE SURGERY 1092, 1098-99 (2008) (outlining that insurance

policies require the documentation of the severity and impact on specific

quality of life issues to elicit coverage).

114 See, e.g., 28 U.S.C. § 1185(b) (1998) (mandating coverage for breast

reconstruction only for those currently receiving coverage for a medically

necessary mastectomy and for the aesthetic purpose of achieving a

symmetrical appearance).

115 See S. COMM. ON INS. ANALYSIS, supra note 20 (finding the California

Public Employees’ Retirement System believed the bill improperly deemed

all reconstructive surgery medically necessary).

116 See S. APPROPRIATIONS COMM. FISCAL SUMMARY, A.B. 1621, 1997–1998

Reg. Sess., (Ca. 1998) (noting potential increases in both costs to individuals

purchasing health care and on the state in the form of higher premiums paid

on behalf of public employees and that because of the statute’s mandate, the

bill will likely cost hundreds of thousands to millions annually).

117 See J.L.F. v. Ariz. Health Care Cost Containment Sys., 91 P.3d 1002,

1006 (Ariz. Ct. App. 2004) (explaining the drafters of the WHCRA intent

was to specifically reimburse breast reconstruction to produce symmetrical

appearance for individuals receiving coverage for medically necessary

mastectomy).

118 See, e.g., Angela Y. Song et al., A Classification of Contour Deformities

after Bariatric Weight Loss: The Pittsburgh Rating Scale, 116 PLASTIC &

RECONSTRUCTIVE SURGERY 1535 (2005) (creating a 10-region, four point

grading system that was designed to quantitatively describe common

deformities found in each region of the body).

119 See S. COMM. ON INS. ANALYSIS, supra note 20 (CAHP criticized the

use of the words ‘normal’ and ‘abnormal’ because these terms, inherently

subjective in nature, will necessarily lead to conflict over what is ‘normal’).

120 See § 1185(b) (requiring a physician to certify that the surgery will

produce a measurable [emphasis added] increase in symmetry and thus

resulting in the decreased possibility of unnecessary and costly operations

occurring).

121 See, e.g., J.L.F., 91 P.3d at 1003 (stressing the quantifiable nature of

achieving symmetry by noting that there was about .5 centimeter difference

between the two breasts).

122 See WEBSTER’S II NEW RIVERSIDE UNIVERSITY DICTIONARY 1172 (Anne

H. Soukhanov ed., Houghton Mifflin Co. 1994) (1984) (defining symmetry

as “correspondence of form and arrangement of parts on opposite sides of a

boundary, as a plane or line or around a point or axis”).

123 See, e.g., Steven S. v. GHI, 787 N.Y.S.2d 828 (N.Y. Civ. Ct. 2004)

(taking into account the patient’s psychological impairments that elicited the

need for his surgery).

124 S. HEALTH & HUMAN SERVICES COMM. ANALYSIS, supra note 27.

125 See, e.g., Steven S., 787 N.Y.S.2d at 831 (observing that the lack of

documentation from a mental health specialist was the apparent reason for

his initial insurance denial for surgery).

126 See, e.g., Jesse T. Nguyen et al., Reduction Mammaplasty: A Review

of Managed Care Medical Policy Coverage Criteria, 121 PLASTIC &

RECONSTRUCTIVE SURGERY 1092 (2008) (finding insurance company’s policies

with respect to a reduction mammaplasty are often arbitrary and not founded

upon a scientific basis).

127 See Angela Y. Song et al., A Classification of Contour Deformities

after Bariatric Weight Loss: The Pittsburgh Rating Scale, 116 PLASTIC &

RECONSTRUCTIVE SURGERY 1535, 1536 (2005) (stating previous classification

systems did not cater to the unique deformities caused by bariatric surgery

including the fact that none of the abdominal classification systems have a

category for multiple rolls in the pannus which often occurs after bariatric

surgery).

128 See generally Robert Pearl & Hugh McAllister, An Economic Analysis

of Health Care Reform and Its Implications for Plastic Surgery, 99 PLASTIC

& RECONSTRUCTIVE SURGERY 1 (1997) (finding a decline in plastic surgery’s

profitability because of an unwillingness to increase health care expenditures

by private insurers and the federal government).

48Health Law & Policy

I. Introduction In Beebe Plains, Vermont, there is a street,

appropriately named Canusa Avenue, that runs

right along the United States-Canada border.

Houses on the northern side of the street are in

Canada while houses on the southern side are

in Vermont. If a resident of the northern side

of Canusa Avenue needs medication to control

high cholesterol, he or she can purchase a 90-

day supply of 20 milligram Lipitor for $170.

On the southern side of the street, Vermont

residents will have to dig much deeper if they

need to purchase the same drug. The same 90-

day supply of Lipitor costs about $330 in the

United States.1

This is not what one would expect to find in the

globalized economy. However, today’s global

economic system has seen the acceleration of cross-

border economic, cultural, and political interactions.

These forces have led to a convergence in the price

of many goods and services. Due to a host of factors,

but especially due to the safety considerations unique

to pharmaceutical drugs and the monumental costs

needed to protect the public health against unhealthy

and ineffective drugs, drugs sold in the United States

escape the equalizing effects of the global economy.

It is estimated that Americans pay between 35% and

55% more for brand name prescription drugs than

people around the world.2 At a time when health care

costs are consuming an increasingly unacceptable

share of U.S. Gross Domestic Product (GDP), public

pressure has mounted for the use of international

market forces in order to lower the price of American

prescription drugs. As the government agency tasked

with regulating prescription drugs, the U.S. Food

and Drug Administration’s (FDA) role of ensuring

safety and effectiveness is threatened by legitimate

demands that health- and life-sustaining drugs become

more affordable. The debate on whether to ease the

restrictions on the importation and re-importation

of drugs reflects a struggle to gain access to cheaper

drugs despite the dangers that a relaxation of the

FDA’s control over drugs will have on public health.

Although the importation and re-importation of drugs

remains illegal under almost every scenario, otherwise

law-abiding Americans are choosing to ignore the law

and potential risks associated with consuming drugs

that have not received FDA approval. The prospect

of alleviating the high cost of health care by purchasing

cheaper drugs has even led states to enthusiastically

flout federal laws barring importation of unapproved

(and thus illegal) drugs.3

Due to the explosion of illegal transactions involving

the purchase of cheaper drugs in Canada by Americans

who seek to transport them into the United States, much

of the debate focuses on re-importation from Canada

and other industrialized nations. Drug re-importation

in the United States “involves [Americans] buying

American-made prescription drugs from countries

to which U.S. pharmaceutical companies export

their products, either by traveling there to buy drugs

or purchasing them through the mail.”4 Enforcing

restrictions on the importation of drugs manufactured

in less developed countries, that lack oversight and

inspections by an FDA-equivalent government agency,

fail to spark the same outcry as the ban on re-importation

of drugs from industrialized countries, such as Canada.

The FDA frequently cites concerns about the labeling,

shipping, and handling of drugs imported from Canada

as a policy justification for maintaining the ban on re-

importation.5 The proposition that the Canadian drug

supply is less safe has seen effective rebuttals, with

some analyses even concluding that it is safer than

drugs in the United States.6 A more convincing reason

for prohibiting the re-importation of drugs is that the

public health suffers when pharmaceutical companies

are discouraged from researching and developing new

drugs due to the reduced profitability that would follow

re-importation.

This article first provides a summary of the two most

accepted explanations for the stark price differential

between drugs sold in the United States and those sold

in the rest of the industrialized world, specifically in

Canada. Second, this article sketches an overview of

how the FDA regulates domestic drugs and imported

drugs that are FDA approved. Third, this article

discusses the law applicable to imported drugs the

* Eloy A. Peral is a J.D. Candidate, May 2010, at the

Washington College of Law. Mr. Peral would like

thank his wife, Lindsey, and his family for their love

and support throughout law school and the writing of

this article.

FDA REGULATION OF THE IMPORTATION OF

PRESCRIPTION DRUGS: OPPORTUNITIES AND

BARRIERS TO LEGAL IMPORTATION

Eloy A. Peral*

At a time when

health care costs

are consuming

an increasingly

unacceptable

share of US Gross

Domestic Product,

public pressure has

mounted for the

use of international

market forces in

order to lower the

price of American

prescription drugs.

49Spring 2009

FDA did not approve, and to re-imported drugs that

the FDA subjected to its approval process. Finally,

this article concludes by briefly analyzing the political

variables that may affect the future of drug importation

and re-importation.

There are numerous theories advanced to explain why

drug prices in the United States and Canada diverge

so significantly, even among American-manufactured

drugs whose only substantive difference lies in where

they are sold. Although no simple explanation exists,

the two most common explanations are government

drug price controls and price discrimination.

Unlike the market-driven pharmaceutical industry in

the United States, Canada’s Patented Medicine Prices

Review Board (PMPRB) enforces price controls on

patented medicines.7 The PMPRB is an independent

arm of the Canadian Government that has the power to

“investigate and regulate excessive pricing of patented

pharmaceutical drugs,” including levying fines if prices

exceed the allowable amount.8 The maximum amount

a pharmaceutical company may charge for patented

drugs is based on the average price of the drug in

seven other developed countries.9 PMPRB regulations

permit patented drug price increases only on a yearly

basis, and only if the increase is proportional to an

increase in the Consumer Price Index (CPI).10 The

PMPRB estimates that Americans pay 67% more for

patented drugs than Canadians do.11

Price discrimination may also contribute to the drug

price differences and may even supersede price controls

as the primary cause.12 Price discrimination occurs

when a company charges different prices in different

markets for the same product.13 Price discrimination is

possible when markets are segmented based on certain

factors, such as the disposable income and tastes of

consumers.14 A common example of this phenomenon

at work occurs when movie theaters charge a lower

price for a movie ticket to seniors and students due

to their lower average income relative to the general

population. Aidan Hollis, a Canadian economist and

proponent of price discrimination as the major factor

driving price differences, asserts that pharmaceutical

companies set a lower price in the Canadian market

than they do in the United States, because of Canadians’

lower income compared to that of Americans’.15

II. The FDA’s Regulatory

Framework The FDA’s role as a modern regulatory agency is the

result of the Federal Food, Drug, and Cosmetics Act of

1938 (FDCA).16 Congress amended the FDCA more

than one hundred times. Some of the amendments

may be described as “technical and remedial,” but

the most prominent have significantly altered the

way the FDA regulates and have expanded the depth

and breadth of the FDA’s regulatory authority.17 A

notable example is the Medical Device Amendment,

which “transformed its approach to regulation of

[medical devices] and substantially enlarged the

array of regulatory tools available to it.”18 The FDA’s

regulatory authority, as originally established by the

FDCA, is generally categorized into two concepts:

(1) “adulteration,” which pertains to the content of a

product; and (2) “misbranding,” which pertains to the

labeling of a product.19 The majority of enforcement

power in the FDCA originates from the adulteration

and misbranding provisions. Through amendments

to the FDCA, the FDA adjusted the definitions of

adulteration and misbranding in order to broaden the

scope of the FDA’s regulatory role. The statutorily

prescribed enforcement remedies available to the FDA

include criminal prosecution (in coordination with the

Department of Justice) of individuals and firms who

commit prohibited acts, injunction against such acts,

seizure of adulterated or misbranded goods, and pursuit

of civil penalties for some violations.20 Yet informal

remedies “comprise the primary routine enforcement

tools of the agency.”21 These tools include recalls,

publicity, and warning letters.22

A. Overview of FDA Regulations Applicable

to Imported and Domestic Drugs

For the FDA to permit the importation of a foreign-

manufactured drug, it must comply with the same

requirements applicable to domestic drugs in interstate

commerce.23 The FDA’s regulation of drugs is

appropriately referred to as a “closed” system in which

the agency regulates the manufacturing, marketing,

and labeling of every drug legally sold in the United

A more convincing

reason for prohibiting

the re-importation

of drugs is that the

public health suffers

when pharmaceutical

companies are

discouraged from

researching and

developing new

drugs due to the

reduced profitability

that would follow

re-importation.

50Health Law & Policy

States. Imported and domestic drugs must satisfy

five requirements, among others, under the FDCA

before they can be legally introduced into interstate

commerce.24 First, a drug is adulterated, and thus

is prohibited from entering interstate commerce, if

it is not produced in accordance with good manu-

factur ing practice (GMP).25 Even if a drug is not

“pharmacologically deficient,” it is adulterated if it

does not comply with GMP.26 Second, a drug must not

be misbranded, “which, among other things, means

that the labeling must bear the name and address of

the manufacturer, packer, or distributer, and [must]

not be false or misleading, and that the drug must

be manufactured in an establishment registered with

the FDA under FDCA § 510.”27 “Any drug, even a

foreign version of an FDA approved drug, will be an

unapproved drug unless it meets all U.S. packaging,

labeling, and dosage requirements.”28 Third, a drug

subject to FDCA § 503(b)(1) will be exempt from FDCA

§ 502(f)(1), when it is “in the possession of a person

. . . regularly and lawfully engaged in the manufacture,

transportation, storage, or wholesale distribution of

prescription drugs,”29 labeling requirements (e.g., re

Rx Only), and includes a package insert in the precise

language and format approved by FDA.30 Fourth,

“[a]ny imported drug must be dispensed only upon

a valid prescription by a licensed prescriber, and

distributed with a pedigree31 except in the case of a

manufacturer or ADR.”32 Lastly, and the most onerous

of all the requirements, the FDA must approve the

drug itself.33

i. The FDA Drug Approval Process

As of 2002 it takes an average of 8.5 years and costs

about $500 million to comply with the rigorous FDA

drug review process and subsequently bring a drug to

the consumer.34 The financial costs and regulatory

risks involved in this review process may help explain

the broad gap between the price of drugs sold in the

United States and those sold in other countries. The drug

development process usually begins in laboratories,

where scientists test the effects of chemical compounds

involved in the disease whose treatment they seek.35

The chemicals are then tested in two or more species

of animals in order to determine whether they can be

safely used in humans.36 This initial laboratory testing

of chemicals is referred to as preclinical research.

If the FDA finds the approach promising and

an institutional review board of scientists,

ethicists, and health-care specialists approves

the sponsor’s study protocol, the drug enters a

progression of tests in humans. Each new trial

phase is predicated on a successful outcome of

the previous one: Phase I studies test the product

for its adverse effects on a small number of

healthy volunteers. Phase II studies probe the

drug’s effectiveness in patients who have the

disease or condition the product is intended

to treat. Phase III studies seek to determine

the drug’s safety, effectiveness and dosage. In

these trials, hundreds or thousands of patients

are randomly assigned to be treated either with

the tested drug or a control substance, most

frequently a placebo.37

The data gathered from these studies and other

information about the drug such as, “what the

ingredients of the drug are, the results of the animal

studies, the way in which the drug behaves in the body,

and how it is manufactured, processed and packaged,”

are then included in a New Drug Application (NDA).38

An NDA is a formal proposal to the FDA to approve

a new pharmaceutical for sale and marketing in

the United States.39 Applications for generic drugs,

“a copy that is the same as a brand-name drug in

dosage, safety, strength, the way it is taken, quality,

performance and intended use,”40 come in the form of

an Abbreviated NDA (ANDA). These applications are

“‘abbreviated’ because they are generally not required

to include preclinical (animal) and clinical (human)

data to establish safety and effectiveness. Instead,

generic applicants must scientifically demonstrate that

their product is bioequivalent (i.e., performs in the

same manner as the innovator drug).”41

ii. Importing FDA Approved Drugs

The FDCA places an additional burden on drug

importers by prohibiting the importation of food and

drugs that “appear” to be adulterated or misbranded.42

If FDA field staff at a port of entry determine that an

FDA-regulated product “appears” to be adulterated

or misbranded, the FDA does not admit the product

and issues an Import Alert (Alert). If an Alert is

issued, identifying a manufacturer, shipper, grower,

importer, or a geographic area, “future shipments of

that product will not be allowed to enter the United

States, unless the importer demonstrates that the

product is in compliance with the FDCA.”43 Thus,

Alerts transfer the burden of showing compliance to

the importer.44 Furthermore, Alerts identify products

that may be detained based on information other than

the results of physical examination of a sample.45 The

FDA, through its reference manual for FDA personnel,

has interpreted “or otherwise” in the enabling statute 46

to mean “. . . a history of the importation of violative

products, or products that may appear violative, or

when other information indicates that future entries

may appear violative.”47 “Appearance” is not defined

by FDA regulations.48 By law, the Secretary of the

51Spring 2009

Department of Health and Human Services (HHS)

holds discretion over the admissibility of FDA-

regulated products offered for import and therefore a

decision to refuse admission is not reviewable under

the Administrative Procedure Act (APA).49 FDA

regulations do provide for an informal hearing to

contest refusal of admission,50 but testimony offered by

the owner or consignee of the product is not mandatory

or limiting upon the Secretary.51

III. Importation of Unapproved

and Reimported DrugsAs noted earlier, foreign versions of FDA approved

drugs and re-imported drugs are considered

unapproved, and thus are prohibited from being

introduced into interstate commerce.52 Despite the

narrow and clearly defined legal avenues by which

Americans may legally obtain pharmaceutical drugs

unapproved by the FDA, in 2003 “nearly five million

shipments, comprising about 12 million prescription

drug products with a value of approximately $700

million entered the United States from Canada.”53

Yet, notwithstanding vigorous legislative efforts to

permit the re-importation of drugs for commercial

use, it remains nonexistent and illegal, despite the

discretion held by the HHS Secretary to waive the

restriction.54 The current enforcement environment

is less restrictive as to the personal importation of

unapproved drugs, perhaps because of the widely

publicized toll prohibitively expensive drugs place on

many Americans.55

A. Personal Importation of

Unapproved Drugs

There are two ways that currently make it possible

for an individual to import unapproved drugs into

the United States for personal use: (1) the FDA’s

enforcement guidelines for U.S. Custom and Border

Protection (CBP) officers that arguably creates a de

facto exemption for individuals who import or reimport

unapproved drugs for personal use;56 and (2) Section

535 of the 2007 Homeland Security Appropriations

Act which prohibits CBP from preventing personal

reimporation of drugs from Canada.57 Primarily due to

its greater resources, the CBP is tasked with enforcing

the drug laws and policies of the FDA and the Drug

Enforcement Agency (DEA).58 These avenues place

formal and informal limitations on the amount of

unapproved drugs that an individual can import.

The Controlled Substances Act (CSA) also contains

specific provisions which allow individuals to

travel internationally with limited quantities of their

prescription medications “if: (1) the substance is found

in one of the approved ‘schedules,’ (2) the substance

is in its original container, (3) a declaration is made to

the United States Customs Service, and (4) use of such

substance is permitted by federal and state laws.”59 The

CSA limits the amount of the controlled substance that

can be imported to 50 dosage units of the controlled

substance unless the individual possesses a valid

prescription issued by a practitioner in accordance

with federal and state law.60 The general purpose of

these provisions is to allow patients to only travel with

medication that may be medically necessary for their

health.

i. FDA’s Personal Importation Policy

The FDCA provides no legal exception for the

importation or re-importation of unapproved drugs,

regardless of whether the importer is an individual

or a business. Notwithstanding the limited exception

to personal re-importation from Canada located

in the 2007 Department of Homeland Security

Appropriations Act, personal importation or re-

importation of unapproved drugs, remain illegal. In

order to “best protect consumers with a reasonable

expenditure of resources,” and perhaps as a recognition

of the potential public backlash for punishing

offenders susceptible to sympathy, the FDA maintains

in its Regulatory Procedure Manual a personal import

policy.61 The guidelines permit FDA personnel to “use

their discretion to allow entry of shipments of violative

FDA regulated products when the quantity and purpose

are clearly for personal use, and the product does not

present an unreasonable risk to the user.”62 Elaborating

this guidance, the manual states that:

In deciding whether to exercise discretion to

allow personal shipments of drugs or devices,

FDA personnel may consider a more permissive

policy in the following situations: (1) when the

intended use is appropriately identified, such

use is not for treatment of a serious condition,

and the product is not known to represent a

significant health risk; and (2) when a) the

intended use is unapproved and for a serious

condition for which effective treatment may

not be available domestically either through

commercial or clinical means; b) there is no

known commercialization or promotion to

persons residing in the U.S. by those involved

in the distribution of the product at issue; c)

the product is considered not to represent an

unreasonable risk; and d) the individual seeking

to import the product affirms in writing that it

is for the patient’s own use (generally not more

than 3-month supply) and provides the name

and address of the doctor licensed in the U.S.

The current

enforcement

environment is less

restrictive as to the

personal importation

of unapproved

drugs, perhaps

because of the

widely publicized

toll prohibitively

expensive drugs

place on many

Americans.

52Health Law & Policy

responsible for his or her treatment with the

product, or provides evidence that the product

is for the continuation of a treatment begun in a

foreign country.63

The guidance does not cover “commercial and

promotional shipments” and lists factors such as “the

type of product, accompanying literature, size, value,

and/or destination of the shipment,” that may be

used to distinguish between personal shipments and

“commercial and promotional shipments.”64

Although the FDA’s enforcement guidelines have been

said to create a de facto exemption for individual, non-

commercial importation, the guidance states that it

“should not be interpreted as a license to individuals

to bring in such shipments.”65 Despite its clear

language, the policy contained in the guidance has

been “widely misunderstood and mischaracterized

as somehow allowing individuals to bring in any

medicines, regardless of the otherwise-applicable

import requirements.”66

ii. 2007 Homeland Security Appropriations Act

Section 535 of the 2007 Homeland Security

Appropriations Act prohibits the CBP from preventing

individuals “not in the business of importing a

prescription drug (within the meaning of section

801(g) of the Federal Food, Drug, and Cosmetic)

from importing a prescription drug from Canada

that complies with the Federal Food, Drug, and

Cosmetic Act . . . . ” 67 This section essentially permits

the re-importation of drugs from Canada that would

otherwise comply with FDA standards. This law does

provide for important limitations for those who seek to

act on this prohibition against enforcement because the

section is only applicable to “individuals transporting

on their person a personal-use of the prescription

drug, not to exceed a 90-day supply . . . . ” 68 These

qualifications substantially limit individuals who may

exploit this exception to the ban on re-importation.

Only individuals who live near the American-Canadian

border can benefit from this exception due to the

prohibitive cost of traveling from further distances.

B. Commercial Re-Importation

There are no legal or enforcement exceptions permitting

the importation of foreign-manufacturer drugs for

commercial purposes. There are two conditional

exceptions to the prohibition on re-importation: (1)

the HHS Secretary has the authority to authorize re-

importation if the “drug is required for emergency

medical care;” 69 and (2) importation may be allowed

under the Medicare Prescription Drug, Improvement,

and Modernization Act (MMA).70

The Prescription Drug Marketing Act (PDMA) of

198871 amended the importation provision of the

FDCA to prohibit the re-importation of a drug unless

the drug is imported by the manufacturer of the drug.72

The PDMA was a result of a series of hearings held

in the mid-1980s by the House Committee on Energy

And Commerce “aimed at illuminating flaws in the

U.S. drug distribution system.”73 A House oversight

report encapsulated the impetus behind the passage of

the PDMA:

The realities of the wholesale marketplace have

combined to create a system in which a large

amount of attractively priced pharmaceuticals

are constantly available, some of which are

not safe or effective. The physical movement,

conditions of storage, and, in some cases,

even the origins of much of this merchandise

is unknown to the first, second, or third level

buyer, who in effect plays a form of Russian

roulette. This situation cannot be allowed to

continue.74

In addition to amending the FDCA to prohibit re-

importation by anyone other than the manufacturer

of the drug, the PDMA also established minimum

federal requirements for the wholesale distribution of

drugs, including requiring pedigree papers for certain

transactions.75

i. The Re-Importation Provisions of the

Medicare Prescription Drug, Improvement,

and Modernization Act (MMA)

The MMA superseded the Medical Equity Drug

Safety Act, which had similar import provisions

to the MMA. The MMA, which became effective

January 1, 2006, was an ambitious and comprehensive

response to the high cost of drugs. Although it is

53Spring 2009

arguably incomplete and severely skewed toward the

interests of drug manufactures,76 it did lead to notable

outcomes. The most notable outcome of the MMA was

that it added Part D, the Medicare Prescription Drug

Benefit, to Title XVIII of the Social Security Act. The

program disperses the risk of drug cost by including

private insurance plans that contract with the Federal

government.77 The drug coverage is provided through

Medicare Advantage prescription drug plans chosen

by Medicare beneficiaries.

Indeed, Medicare Part D, as it is commonly referred to,

is the most substantial expansion of Medicare ever. Due

to its extension of Medicare benefits to prescription

drugs, research suggests that the MMA may have led to

a decline in importation of drugs from Canada.78 It has

been alleged that the U.S. Government has strengthened

enforcement against personal re-importation in order

to encourage enrollment in Medicare Part D.79

The MMA provides that “The [HHS] Secretary,

after consultation with the United States Trade

Representative and the Commissioner of Customs,

shall promulgate regulations permitting pharmacists

and wholesalers to import prescription drugs from

Canada into the United States.”80 The MMA then

provides requirements that importers and imported

drugs must comply with. The MMA also contains a

provision allowing the HHS Secretary to authorize

waivers for individual importation: “The Secretary

may grant to individuals, by regulation or on a case-by-

case basis, a waiver of the prohibition of importation

of a prescription drug or device or class of prescription

drugs or devices, under such conditions as the Secretary

determines to be appropriate.”81 However, these

provisions are ineffective until the “Secretary certifies

to the Congress that the implementation of this section

will – (A) pose no additional risk to the public’s health

and safety; and (B) result in a significant reduction

in the cost of covered products to the American

consumer.”82 To date, all HHS Secretaries since the

MMA and its predecessor, the Medical Equity Drug

Safety Act became effective have declined to issue

certification.83

ii. The States Respond

The re-import provisions of the MMA provides states

with an uncertain legal window, but a potent political

instrument to move forward with state-sponsored drug

programs that would give residents access to cheaper

re-imported drugs. The MMA prompted states to

petition the HHS to grant waivers to permit individuals

to re-import drugs from Canada and to issue a

certification permitting the commercial re-importation

of drugs from Canada. As mentioned before, no

waivers or certifications have been issued under MMA

and its predecessor. All state efforts to have the MMA

legitimize their state re-importation efforts through

litigation have also failed. Despite this, states have

continued to operate re-importation programs with the

aid of Canadian pharmacies.84

In 2005, the Vermont Agency of Administration

submitted a citizen petition to the FDA requesting that

the FDA allow the Vermont State Employee Medical

Benefit Plan (VTSEMBP) to “establish a program

for the orderly individual importation of prescription

medications.”85 In the petition, the State of Vermont

explained that it wanted:

Authority to contract with providers to create a

system under which its members have the option

of forwarding a prescription to a Canadian firm

where the prescription would be reviewed by a

physician familiar with the member’s medical

history and re-written as a Canadian prescrip-

tion, which would be forwarded to a licensed

Canadian pharmacy to be filled and sent by mail

to the member in the United States.86

The FDA denied this petition. In Vermont v. Leavitt,87

Vermont alleged that the FDA’s refusal of a Vermont’s

citizen’s petition was “arbitrary and capricious” in

violation of the Administrative Procedure Act (APA).88

Vermont utilized some creative, yet very unconvincing

applications of statutory interpretation to argue that the

MMA authorized their program89 and challenged the

constitutionally of the Act by unsuccessfully invoking

the non-delegation doctrine.90 The Defendants claimed

that they were required to deny the petition because

it proposed a drug importation program that violated

federal law.91 In granting the Defendant’s motion to

dismiss, the Court held that the MMA could not be

construed to authorize Vermont’s importation program

and that the program would violate 21 U.S.C. section

331(t) by “causing” its members to import drugs in

violation of 21 U.S.C. section 381(d)(1).92

A year later in Montgomery County, Md. v. Levitt,

Montgomery County, Md. (County) requested a waiver

to allow the residents of the County and its government

to import drugs from Canada.93 The County applied

the same arguments used by Vermont, which yielded

the same results.94

Undeterred, states have persisted in their efforts

to facilitate the purchase of cheaper foreign drugs.

The most ambitious state leader was former Illinois

Governor Milord R. Blagojevich, who created the

web site I-Save RX, which also serves residents of

Wisconsin, Kansas, Missouri, and Vermont.95 I-Save

54Health Law & Policy

RX uses a Canadian Pharmacy Benefit Management (PBM), which sources

the drugs from Canada, Ireland, the United Kingdom, New Zealand, and

Australia. “Under the program, US prescriptions and medical histories are

forwarded to physicians in the supplying countries, apparently rewritten to

comply with local laws, and dispensed by local, licensed pharmacists who

then ship the medicine to the United States.”96 The program only applies

to refills and excludes most drugs that require special handling.97 Former

Governor Blagojevich maintains that, on average, the drugs from these

countries are 25–50% less expensive than in the United States and identical

to the FDA-approved counterpart in every respect other than price.98

Despite the purported savings the program offers, its aggregate impact

has been minimal. Pharmaceutical companies have sought to obstruct

foreign pharmacies selling to Americans by tightening oversight over their

wholesale distribution99 and the FDA has targeted shipments into the United

States by I-Save RX.100 Moreover, with 27 million eligible residents to

the program, fewer than 20,000 orders were placed in its first two years

of operation. Perhaps its most important (and intended) function is as a

“political symbol.”101

V. ConclusionDespite the re-importation-friendly political environ ment that has likely

emerged from the presidential and congressional elections, the possibility

of a relaxation of restrictions on drug importation and re-importation is

uncertain. As a U.S. Senator, President Barack Obama voted in favor of

legislation that would permit drug re-importation.102 The Senate and House

of Representatives are currently in the hands of Democrats, who have been

generally more receptive to re-importation than Republicans. Further, the

recent credit crisis engulfing the global economy, if it precipitates a sustained

economic decline, may pressure Congress to take actions to lower the cost

of healthcare by passing re-importation legislation. Legislation enabling

re-importation is already awaiting action in Congress.103

Yet recent events remind us of the added health risks associated with the

manufacturing of drugs and other FDA regulated products that are not under

the constant regulatory watch of the FDA. The deaths caused by Heparin

manufactured in a Chinese facility104 and the warning letters105 and import

alert106 issued by the FDA to the largest foreign supplier of generic drugs to

the United States, Ranbaxy Laboratories Ltd., for deviations from GMP in

two of their facilities in India,107 eroded the public’s support for re-

importation. Advisors for President Obama express that the Heparin incident

will make it more challenging to pass reimporation legislation.108 Lastly,

the influence of the pharmaceutical industry can never be underestimated.

With billions of dollars at stake, American pharmaceutical companies will

continue their vigorous lobbying efforts. It is thus uncertain whether the

“invisible hand” will provide Americans with cheaper drugs anytime soon.

1 Vermont State v. Leavitt, 405 F. Supp. 2d 466, 469 (D. Vt. 2005)

(explaining facts of case).

2 See Melicia Seay, Drug Importation, Health Policy Tracking Service

(Thomson West) ¶ 3 (July 10, 2006), available at http://www.netscan.com/

EG-NSCNFS-B02/HPTSFILES%5CISSUEBRIEFS% 5CDrug1460.pdf.

3 See infra Part IV(B)(ii).

4 Colleen Newvine, Conference explores pros and cons of drug

reimportation, University of Michigan News Service, Nov. 3 2003, available

at http:// www.umich.edu/~urecord/0304/Nov03_03/07.shtml.

5 See infra Part IV(B).

6 See Kevin Outterson, Pharmaceutical Arbitrage: Balancing Access and

Innovation in International Prescripton Drug Markets, 5 YALE J. HEALTH

POL’Y L. & ETHICS 193, 288 (2005).

7 See Devin Taylor, Note, Importing a Headache for Which There’s No

Medicine: Why Drug Re-importation Should and Will Fail, 15 J.L. & POL’Y

1421, 1434 (2007).

8 See id. at 1434-35.

9 Jared Martin, Note, United States Prescription Drug Crisis:

Reimportation of Canadian Prescription Drugs Is Not the Answer, 27 J.

LEGAL MED. 477, 478-79 (2006).

10 Taylor, supra note 7, at 1435.

11 Seay, supra note 2, at ¶ 3.

12 Martin, supra note 9, at 479.

13 Matthew Bishop, Price Discrimination adapted from Essential

Economics (Profile Books), available at http://www.economist.com/research/

economics/searchActionTerms.cfm?query=price+discrimination.

14 Id.

15 Martin, supra note 9, at 479.

16 21 U.S.C §§ 301-399 (2008); Peter Barton Hutt, Richard A. Merrill &

Lewis A. Grossman, Food and Drug Law: Cases and Materials 13 (3rd ed.

2007).

17 See HUTT, MERRILL & LEWIS, supra note 16, at 14-15

18 Id. at 15.

19 See id. at 13.

20 See id. at 14

21 See id.

22 See id.

23 See Matthew B. Van Hook, Securing the Global Supply Chain: Evolving

Federal/State Law – Prescription Drug Distribution, Counterfeit, Pedigree

Requirements, and the Internet, in PATENTS COPYRIGHTS, TRADEMARKS, AND

LITERARY PROPERTY COURSE HANDBOOK SERIES 917-18 (Practicing Law

Institute 2006).

24 See id. at 918.

25 21 U.S.C § 351(a) (2008).

26 See Leavitt, 405 F. Supp. 2d at 473.

27 21 U.S.C. § 331 (2008); Van Hook, supra note 23, at 918.

28 Leavitt, 405 F. Supp. 2d at 473; see 21 U.S.C. §§ 331(a), (d) (2008).

29 21 C.F.R §201.100(a)(1)(i) (2009).

30 See Van Hook, supra note 23, at 919.

31 A pedigree is a “statement . . . identifying each prior sale, purchase,

or trade of such drug (including the date of transaction and the names and

addresses of all parties to the transaction), Id. at 915 (citing 21 U.S.C.

§ 353(e)(1)(A) (2008)).

32 See id. at 919.

33 See generally Part II.A.i.

34 Food and Drug Administration, FDA and the Drug Development

Process: How the Agency Ensures That Drugs are Safe and Effective (2002),

available at http://www.fda.gov/opacom/factsheets/justthefacts/17drgdev.pdf.

35 See id.

36 See id.

37 See id.

38 See Food and Drug Administration Center for Drug Evaluation and

Research, New Drug Application (NDA) Process, http://www.fda.gov/cder/

regulatory/applications/nda.htm (last visited Feb. 9, 2009).

39 See id.

40 Food and Drug Administration Center for Drug Evaluation and

Research, Generic Drugs: Questions and Answers, http://www.fda.gov/

cder/consumerinfo/generics_q&a.htm#whatare (last visited Feb. 9, 2009)

(explaining distinctions between generic and brand-name drugs).

41 Food and Drug Administration Center for Drug Evaluation and

Research, Abbreviated New Drug Application (ANDA) Process for Generic

Drugs, http://www.fda.gov/cder/regulatory/applications/ANDA.htm (last

visited Feb. 9, 2009).

42 See 21 U.S.C. § 381(a) (2008).

55Spring 2009

43 Christine M. Humphrey, Note, The Food and Drug Administration’s

Import Alerts Appear to be “Misbranded”, 58 FOOD & DRUG L.J. 595, 597

(2003).

44 See id. at 597.

45 See id. at 597-98; see also 21 U.S.C. § 381(a) (“If it appears from the

examination or otherwise…).

46 See 21 U.S.C. § 381(a).

47 See Food and Drug Administration, Office of Regulatory Affairs,

Regulatory Procedures Manual, Ch. 9-6 “Detention without Physical

Examination (DWPE),” available at http://www.fda.gov/ora/compliance_ref/

rpm/chapter9/ch9-6.html.

48 See Humphrey supra note 43 at 595.

49 See Sugarman v. Forbragd, 405 F.2d 1189, 1190 (9th Cir. 1968)

(involving an action to review FDA refusal to admit coffee beans offered for

import).

50 21 C.F.R. § 1.94(a) (2008).

51 Sugarman v. Forbragd, 267 F. Supp. 817, 824 (N.D. Cal. 1967).

52 American-manufactured drugs that comply with FDA standards, but that

cannot be imported because of the express ban on reimportation and foreign

drugs manufactured abroad, will be referred to collectively as unapproved

unless referred to individually.

53 DEP’T OF HEALTH & HUMAN SERVS., TASK FORCE ON DRUG IMPORTATION,

REPORT ON PRESCRIPTION DRUG IMPORTATION ix (2004), available at http://

archive.hhs.gov/importtaskforce/Report1220.pdf.

54 See infra Part IV(B).

55 See e.g., Katie Merx, Canadian Drugs Beat Medicare, Many Say,

DETROIT FREE PRESS, Apr. 6, 2006, available at http://www.redorbit.com/

news/health/460473/canadian_drugs_beat_medicare_many_say_seniors_us_

plan_not/index.html.

56 Food and Drug Administration, Office of Regulatory Affairs, Regulatory

Procedures Manual, Ch. 9-2 “Coverage of Personal Importation,” available

at http://www.fda.gov/ora/compliance_ref/rpm/chapter9/ch9-2.html

[hereinafter Manual]; see Terry, Prescriptions sans Frontières, supra note 59,

at 272 n. 129 (characterizing the enforcement guidelines found in the manual

as a de facto exemption for personal importation from the general prohibition

on drug importation and re-importation).

57 Department of Homeland Security Appropriations Act of 2007, Pub. L.

No. 109-295 § 535 (2008).

58 Nicolas P. Terry, Prescriptions Sans Frontieres (or How I Stopped

Worrying About Viagra on the Web but Grew Concerned About the Future of

Healthcare Delivery), 4 YALE POL’Y L. & ETHICS 183, 203-4 (2004).

59 Terry, Prescriptions sans Frontières, supra note 56, at 205 (citing 21

U.S.C. § 956(a) (2008)). 21 U.S.C. § 956(a) (2008).

60 Id. § 956(a)(2); see Terry supra note 56 at 204.

61 Manual, supra note 56.

62 Id.

63 Id. (emphasis added).

64 Id.

65 Id. see Terry, Prescriptions sans Frontières, supra note 56, at 272 n. 129

(characterizing the enforcement guidelines found in the manual as a de facto

exemption for personal importation from the general prohibition on drug

importation and re-importation).

66 Van Hook, supra note 23, at 921.

67 Department of Homeland Security Appropriations Act of 2008, § 535

(emphasis added).

68 Id. (emphasis added).

69 21 U.S.C. § 381(d)(2).

70 Pub. L. No. 108-173, 117 Stat. 2066.

71 Pub. L. No. 100-293, 102 Stat. 95.

72 21 U.S.C. § 381(d)(1) (“Except as provided in paragraph (2) and section

384 of this title, no drug subject to section 353(b) of this title or composed

wholly or partly of insulin which is manufactured in a State and exported

may be imported into the United States unless the drug is imported by the

manufacturer of the drug.”)

73 Van Hook, supra note 23, at 914.

74 Id. (quoting) (Dangerous Medicine: The Risk to American Consumers

From Prescription Drug Diversion and Counterfeiting, 99th Cong., 2nd

Sess., p. 20 (Comm. Print 99-Z 1986) (Report by the Subcommittee on

Oversight and Investigations of the Committee on Energy and Commerce,

Hon. John D. Dingell, Chairman)).

75 Id.

76 Martin, supra note 9, at 484.

77 Id. at 483

78 See Martin, supra note 9, at 484.

79 Id.

80 21 U.S.C. § 384(b) (2008).

81 Id. § 384(j)(2).

82 Id. § 384(1)(1).

83 Montgomery County, Md. v. Leavitt, 445 F. Supp. 2d 505, 510 (S. Div.

Md. 2006).

84 Id.

85 Vermont, 405 F. Supp. 2d at 469-70.

86 Id. at 471.

87 State v. Leavitt, 405 F. Supp. 2d 466 (D. Vt. 2005).

88 Id. at 470.

89 Id. at 474 (“Vermont relies on a highly implausible interpretation of the

statute.”).

90 Id. at 475.

91 Id. at 474.

92 See 21 U.S.C. § 331 (“The following acts and the causing thereof are

prohibited:”).

93 Leavitt, 445 F. Supp. 2d at 507.

94 See id. at 516.

95 Nicolas P. Terry, Under-Regulated Health Care Phenomena in a Flat

World: Medical Tourism and Outsourcing, 29 W. New Eng. L. Rev. 421, 450

(2007) [hereinafter Medical Tourism and Outsourcing].

96 Id. at 450.

97 Id.

98 See Martin supra note 9, at 486.

99 See, e.g., Bernard Simon, Pfizer Moves To Try To Stop Drugs from

Canada, N.Y. TIMES, Jan. 14, 2004, at W1, available at 2004 WLNR

5507399 (Westlaw); Fearing End to Canada Drugs, States Now Look to

Europe, USA Today, Jan. 14, 2005, available at http://www.usatoday.com/

news/health/2005-01-14-drugs-europe_x.htm.

100 FDA: Seizes Shipments Imported Through I-Save Rx Program,

Am. Health Line, Mar. 10, 2005, available at http://www.lexisnexis.com/

lawschool/research/default.aspx?ORIGINATION_CODE=00092&

signoff=off.

101 Medical Tourism and Outsourcing, supra note 102, at 451.

102 See generally Jeffrey Young, Biotech industry not seeing much

difference between McCain, Obama. The Hill, Sept. 8, 2008 available

at http://thehill.com/business--lobby/biotech-industry-not-seeing-much-

difference-between-mccain-obama-2008-09-08_2.html.

103 See Pharmacuetical Market Access and Drug Safety Act of 2007 S.242,

110th Cong. (2007) ; See Drug and Device Accountability Act of 2008

S.3409, 110th Cong (2008).

104 McCain and Obama Rethink Drug Importation. Legal Broadcast

Network., Oct. 1, 2008. Available at http://blog.legalbroadcastnetwork.com/

the-lbn-blog/2008/10/1/mccain-and-obama-rethink-drug-importation.html.

105 See 21 C.F.R. § 100.2 (2008) (“Informal enforcement actions include

warning letters . . . .”).

106 See supra Part III.a.ii.

107 FDA Issues Warning Letters to Ranbaxy Laboratories Ltd., and an

Import Alert for Drugs from Two Ranbaxy Plants in India. U.S. Food and

Drug Administration. Sept. 16, 2008, available at http://www.fda.gov/bbs/

topics/NEWS/2008/NEW01886.html.

108 McCain and Obama Rethink Drug Importation. Legal Broadcast

Network., Oct. 1, 2008. Available at http://blog.legalbroadcastnetwork.com/

the-lbn-blog/2008/10/1/mccain-and-obama-rethink-drug-importation.html.

IN THE NEWS

56Health Law & Policy

Will the Health Sector Withstand Tough

Economic Conditions?

Kimberly Hodgman

With growing anxiety over unemployment rates, lawmakers

and job seekers hunt for industries that promise both growth

and job security. The health care sector ranks high as one of

the most secure industries.

Seeming resilient to the downturns of the economy, the Bureau

of Labor predicts that the health care sector will add 3 million

jobs between 2006 and 2016 despite the monumental job cuts

in other sectors. For decades, the job pool could not keep

up with the demand and hospitals even searched outside the

United States to fill positions.

With statistics like these, it is no wonder that President Barack

Obama has targeted the health sector for investment in both

job training and job creation. On February 19, 2009, President

Obama signed the American Recovery and Reinvestment Act

of 2009 (H.R. 1) dedicating $59 billion for investment in the

health care sector. The bill specifically marked $500 million

for the training and education of health care professionals to

alleviate shortages.

Still, it is not all sunshine and rainbows for the health care

industry. With a rise in unemployment, doctors are treating

more uninsured patients. Likewise, the declining stock

market has yielded lower dividends for hospital investments.

Furthermore, patients are declining to proceed with elective

surgeries. These three factors have contributed to lower fiscal

performance of some hospitals leading to cutbacks and hiring

freezes.

Individuals hoping to grab one of the coveted health care jobs

should expect more competition in the future. Federally funded

access to training will contribute to a larger applicant pool.

With the uncertainty of the economy many current employees

are reluctant to leave their positions, resulting in decreased

attrition and lower demand for employment.

The Economic Crisis’ Effect on Obesity

Kristen Barry

The Federal Centers for Disease Control and Prevention

recently reported that while a third of Americans are obese,

this number has shown signs of stabilization. The downturn

in the economy has lead many researchers to fear that this

number will begin to rise as American’s put on what has been

referred to as “recession pounds.”

In the current economic climate individuals have cut back

on the amount they spend on food. Cutting back on the cost

of groceries often means cutting back on the quality of food.

Fresh fish, fruits, vegetables, and whole grains can cost a

person up to three times the amount they would spend on the

caloric equivalent processed foods, high in fat and sugars.

In addition to a healthy diet, a person needs to exercise to prevent

obesity. The cost of joining a health club or athletic group is

money that many Americans no longer have or can justify

spending when they are unsure of when their next paycheck

will come. The emotional and physical stress that economic

uncertainty causes may prevent people from exercising,

leaving them with no energy to maintain a nutritious diet.

During late 2008, when most stocks were crashing, stocks

of fast food companies were outperforming predictions.

McDonald’s reported increased sales globally in the third

quarter of 2008, while the organic grocery store Whole Foods

had a substantially lower sales increase than in 2007. Amidst

all the dark predictions of obesity during the economic crisis,

some experts suggest that this is an opportunity for Americans

to revamp their unhealthy eating habits by consuming less and

cooking at home.

57Spring 2009

IN THE NEWS

The Suleman Octuplets:

Raises Questions about the Need for

Responsible Reproduction

Megan McCarthy

With the power and ability to manipulate reproduction comes

responsibility and accountability on the part of patients and

doctors. On January 26, 2009, Nadya Suleman gave birth to

octuplets, resulting in only the second set of octuplets born

in the United States. After the news of this medical wonder

was released, several startling facts about Ms. Suleman came

to light. When 33-year-old Suleman was implanted with six

embryos through in vitro fertilization that resulted in her

octuplets, she already had six children ranging in age from two

to seven, no clear source of income, no husband, no home of

her own, and was receiving government assistance. Suleman

lives with her mother in a home that has gone into mortgage

default, three of her older six children are receiving disability

benefits, and the family receives $490 each month in food

stamps.

Suleman’s case raises questions about the lack of regulation

covering doctors and clinics that provide fertility services.

Giving birth to extreme multiples comes with tremendous

risks for both the mother and the babies. Multiple-birth

pregnancies place a mother at high risk for premature labor

and delivery, and they put the babies at an increased risk for

brain injuries, underdeveloped lungs and intestines, cerebral

palsy, and several other lifelong medical and developmental

disabilities. Medical guidelines provide that women under the

age of 35 should not be implanted with more than two embryos

“in the absence of extraordinary circumstances.” Even though

these guidelines state that implanting more than 2–3 embryos

is risky and outside the scope of acceptable medical practice,

Suleman was implanted with six.

While organizations like the American Society for Assisted

Reproductive Medicine and the Society for Assisted Repro-

ductive Technology provide guidelines for fertility doctors

to follow, these guidelines are not legally enforceable. Sule-

man’s case raises the question of whether physicians should

screen their patients and take into account whether prospective

mothers or couples may have any feasible means of supporting

their children. A basic consideration of whether the parents

can financially support their children is one factor that could

be a minimum requirement for fertility treatments, though

implementation of this policy is likely to face great opposition.

Recent Statistics on HIV/AIDS in the

District of Columbia Show that it is a

City-Wide Epidemic

Molly Conway

In February 2009, the District of Columbia (“the District”)

Department of Health released the 2008 HIV/AIDS

epidemiology update report. This report found that three

percent (n=13,466) of the District’s residents are known to

currently live with HIV/AIDS – a figure that is 22% higher

than in 2006. Comparatively speaking, the U.S. Centers for

Disease Control and Prevention (CDC) define an HIV/AIDS

epidemic as severe when it exceeds one percent of the residents

in a given geographic area. This figure is higher than in West

Africa and is similar to Kenya and Uganda. It is expected that

the number of afflicted individuals is between one-third and

one-half higher because many individuals are not aware of

their status.

The gender and race combination with the highest rate of

HIV/AIDS is African American males; the age group with the

highest rate of the virus is 40-49 – both groups are around seven

percent. About three percent of African American women

and Caucasian men, respectively, currently live with HIV/

AIDS. The lowest rate of HIV/AIDS is in Caucasian women

who are at two-tenths of a percent. The transmission of HIV/

AIDS occurred most often in male homosexual relationships,

heterosexual relationships, and intravenous drug use.

The District is divided into eight wards. Each ward averages

around two percent of their respective population living with

the virus (although twenty percent of individuals who tested

positive did not record the ward in which they reside), with the

exception of Ward 3 – notoriously the wealthiest ward in the

District. Of the over 13,000 individuals living with HIV/AIDS,

about 1,200 are homeless (n=401) or incarcerated (n=891), as

of the time of testing.

A brief glimpse at the correlation between socioeconomic

status and HIV/AIDS is seen from the ward statistics. In 2009,

the District will perform more targeted studies to determine

which subgroups are most afflicted. It is apparent, however,

that this is a city-wide epidemic, one that cannot attributed

solely to an individual’s socioeconomic or racial background.

58Health Law & Policy

Health Information Technology

in the American Recovery and

Reinvestment Act of 2009

Molly Conway

Health Information Technology (“Health IT”) is

the electronic compilation of medical records to

create a comprehensive management system of

individuals’ health information. The American

Recovery and Reinvestment Act of 2009 (H.R. 1)

allots more than $19 billion for the creation of a

national central Health IT system. This legislation

will provide incentives to medical institutions

and physicians who currently utilize electronic

medical records (“EMRs”) and those who decide

to follow suit. Additionally, funds are provided

for Indian Health Services to further telehealth

initiatives and provide physicians access to

state-of-the-art procedures. This package also

creates a pool of money for grants to physicians

and training institutions and allocates funds for

infrastructure needed to further the use of Health

IT. Finally, a significant portion of the Health IT

funding is set aside for Medicare and Medicaid.

Currently, an individual who has several doctors

may unnecessarily undergo the same test for

each doctor. With EMR, the results can be

disseminated to all doctors who request the same

test so as to save the patient time and money. It is

expected that the utilization of EMR in Medicare

and Medicaid will save more than $12 billion

over the next decade.

Most notably, the legislation creates the Office of

the National Coordinator for Health Information

Technology within the Department of Health and

Human Services. This Office will ensure security

of information while implementing a central

entity to review policies and recommend changes

for a seamless process.

It is expected that in the next decade, 70%

percent of hospitals and 90% of physicians will

utilize electronic health records. The advent of a

national Health IT program is only the first step

in health care cost savings and will ensure that

individuals receive the best care possible.

The American Recovery

and Reinvestment Act Impacts

COBRA Benefits

Kathryn Coniglio

With the number of unemployed workers in the

United States reaching record highs, new policies

are being implemented to accommodate the

healthcare needs of the newly jobless. Since 1985,

the Consolidated Omnibus Budget Reconciliation

Act (COBRA) has allowed employees who have

lost their jobs to maintain healthcare benefits for

eighteen months, as long as they had coverage

WASHINGTON UPDATE:

THE ECONOMIC RECESSION AND THE

GOVERNMENT’S RESPONSE

59Spring 2009

prior to being laid off and were not terminated

for misconduct.

The American Recovery and Reinvestment

Act, signed into law February 17, 2009, has

greatly affected the COBRA program. The

Act contains a number of COBRA revisions,

effective immediately. Previously, employees

paid COBRA premiums out-of-pocket. Under

the new law, the government will subsidize 65%

of costs. Employers will be required to pay the

subsidized portion directly to the government and

will be reimbursed through reduced remittance of

payroll taxes withheld from employees.

Anyone laid-off on or after September 1, 2008

will have 60 days to retroactively enroll in

COBRA at 35% of the original cost. Employers

must notify terminated employees of a “second

chance” at this health care coverage. Reduced

premiums will be available for those laid off

through December 31, 2009. COBRA benefits

will last for nine months, until the individual

becomes eligible for another health plan, until

the 18-month coverage period expires, or until

the individual fails to contribute his 35% share,

whichever date comes first. Those individuals

who choose to utilize subsidized COBRA benefits

will not face increased income taxes unless the

individual falls into a high-income bracket.

Healthcare experts have already voiced concerns

that the expansion of COBRA will discourage

employers from offering health insurance.

Although employer contributions will be

reimbursed quarterly, companies already strained

by the economic downturn may choose to

eliminate healthcare benefits rather than “loan”

the government COBRA payments for each laid

off employee who elects coverage.

An Overview of Health Sector

Spending in President Obama’s

Stimulus Package

Walakewon Blegay

Within the first 100 days of his presidency,

President Barack Obama’s “American Recovery

and Reinvestment Act of 2009 (ARRA),” a $787

billion economic stimulus package, passed both

Houses of Congress and was signed into law.

ARRA has a number of provisions directed

towards changes in the healthcare system,

funneling approximately $150 billion to a

number of major health care initiatives. States

will receive an additional $87 billion of matching

funds to bolster their Medicaid programs over a

27-month period.

Additionally, the National Institute of Health

(NIH) will receive $10 billion for research grants

in areas such as cancer, Alzheimer’s disease, heart

disease, stem cells, and for renovation of research

facilities. The Department of Veterans Affairs

will receive $1.2 billion to construct and renovate

healthcare facilities and national cemeteries. The

package allocates the Department of Defense $2.3

billion to fund construction of military health and

dental clinics. ARRA will distribute $1.1 billion

between the Agency for Healthcare Research and

Quality, NIH, and the Department of Health and

Human Services to compare the effectiveness of

medications and medical devices. In addition,

prevention and wellness programs will receive $1

billion to address the issues of obesity, smoking,

and other risk factors for chronic disease and

immunization.

President Obama noted that an estimated 45.7

million Americans are uninsured, and pledged

that ARRA was the first step to insulating

Americans from what he called “the crushing

cost of health care.”

60Health Law & Policy

WCL Health Law Project Announces Health Law and Policy Institute: June 15–19, 2009

With pleasure, the Health Law Project, Program on

Law and Government announces the second annual

Health Law and Policy Institute. This one-week

program, which will be held from June 15–19, 2009,

will provide J.D. and LL.M. students and practitioners

with intensive training in a broad spectrum of health

law and policy topics.

The Summer Session Health Law and Policy Institute

is designed for legal professionals who are practicing

or preparing to practice health care law, and offers

training in theoretical and practical aspects of health

law and policy. American University Washington

College of Law’s location in the nation’s capital also

provides students with an opportunity to combine

participation in the Institute with exciting externships

or summer positions that will enrich their health care

law experience.

*Courses may be taken for academic credit or for Continuing Legal

Education. These credits can also be applied toward an LL.M. degree

with a Health Law specialization in the Law and Government Program.

A Certificate of Attendance will be presented to participants who do

not wish to receive academic credit. Course schedule and offerings are

subject to change. International Participants should apply at least five

weeks in advance and bear the sole responsibility for applying for and

obtaining a visa at the American Embassy or Consulate in their country.

Applicants whose first language is not English must submit a minimum

TOEFL score of 580 or a written certificate of proficiency from an

accredited language institution, unless applicant holds a degree from

an accredited U.S. institution. Completed application and a $65 non-

refundable application fee should be mailed directly to the Registrar’s

Office.

REGISTRATION INFORMATION:

2009 Calendar

Completed Application and Fee Due: May 2

Registration ends: May 15

Classes begin: June 15

Classes end: June 19

Take-home exams/papers**: July 12

**if applying for academic credit

Tuition and Fees for Students

Tuition per credit for 2009: $1431

Non-refundable Application Fee: $65

Student Activity Fee: $50

Note: Tuition does not include expenses for books and other reading materials.

To inquire more about the program, receive an

official brochure, or request an application,

please contact:

Summer Session Health Law and Policy Institute

American University Washington College of Law

4801 Massachusetts Avenue, NW

Washington, DC 20016

ATTN: Corrine Parver, Esq.

Health Law Project, Program on Law and Government

Tel: 202-274-4136; Fax: 202-730-4709

Email: health@wcl.american.edu

Web: wcl.american.edu/go/healthlaw

61Spring 2009

WCL Health Law Project Announces Summer Session Program

COURSES

Introduction to International Health, Human Rights, and

Public Health

Introduces students to the substance and theory of human rights law through a

focus on public health. Exploring the linkage between human rights, international

public health policy, and international law, the course examines the right to health

vis-à-vis other human rights, as framed by international treaties and covenants.

Introduction to Medicine for Lawyers

Teaches up-to-date information in an introduction to basic medical principles

and practices, and reviews medical negligence law for those students interested

in medical liability issues.

Intersection of Intellectual Property and Health Care

Provides significant exposure to the many relationships between U.S. patent,

trademark, and copyright laws and health care, including access to medicines,

data privacy, genetics, and biotechnology.

Legal Issues in Health Care Fraud and Abuse

Examines fraud and abuse in the delivery of health care through discussions of

the criminal and civil laws and regulations that combat various forms of health

care fraud. Course includes a False Claims “Boot Camp,” as well as Stark and Anti-

kickback statute issues, health care anti-fraud enforcement efforts, sanctions, and

compliance.

Introduction to Health Care and Life Sciences

Fundamentals

Addresses the unique issues attorneys face in counseling health industry clients,

including coding, coverage, reimbursement, billing, compliance, and other

regulatory matters. Includes Congressional and state legislative initiatives, and

recent federal government regulatory actions.

Introduction to Bioethics

Considers legal, ethical, and public policy problems posed by developments in

health care financing, allocation, and delivery. Topics include bioethics, federal

reform of health policy, health care dispute resolution, health care transactions,

managed care, medical liability, health law legislative and regulatory process,

and public health law.

Introduction to Genetics

Introduces students to the many ways in which the legal system, construed

broadly, is influenced by and influences the science of genetics. This course

also aims to introduce students to the ethical and societal concerns raised by

new genetic technologies and how the law addresses these issues or may do

so in the future.

FACULTY EXPERTS

John (Jack) T. Boese, Esq.

Partner, Fried Frank Harris Shriver and Jacobson LLP

Robert Dinerstein, Esq.

Professor of Law, American University Washington College

of Law

Sean Flynn, Esq.

Associate Director, American University Washington College

of Law Program on Information Justice and Intellectual

Property (PIJIP )

Jennifer Geetter, Esq.

Partner, McDermott Will & Emery

Heidi Gertner, Esq.

Counsel, Food and Drug Administration

Lewis Grossman, Esq.

Professor of Law, American University Washington College

of Law

Maureen McTeer, Esq.

Adjunct Professor, University of Ottawa Law School

Joel L. Michaels, Esq.

Partner, McDermott Will & Emery LLP

Corrine Parver, Esq.

Practitioner-in-Residence and Executive Director, Health Law

Project, American University Washington College of Law

Steven M. Pavsner, Esq.

Partner, Joseph, Greenwald & Laake

Houeida Saad, Esq.

Deputy General Counsel, INOVA Health System

Lynn Shapiro Snyder, Esq.

Senior Partner, Epstein Becker and Green, P.C.

Carrie Valiant, Esq.

Partner, Epstein Becker and Green, P.C.

Javier Vasquez, Esq.

Special Counsel, Pan American Health Organization, WHO

Please visit our Web site for updates to the list of Faculty Experts.

Non-Profit Org.

US Postage

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To submit an original article for possible publication in

future issues of HLP, please email your article to hlp@wcl.

american.edu, or mail a hard copy of your submission to

Health Law & Policy, American University Washington

College of Law, 4801 Massachusetts Avenue, NW

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